HOME SHOPPING NETWORK INC, DEF 14A, 1996-03-28

HOME SHOPPING NETWORK INC
DEF 14A, 1996-03-28
CATALOG & MAIL-ORDER HOUSES

Previous: HOME SHOPPING NETWORK INC, ARS, 1996-03-28

Next: PARKER & PARSLEY 85-A LTD, 10-K, 1996-03-28

<PAGE> 1

SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION

PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. 1)

Filed by the registrant /X/

Filed by a Party other than the Registrant / /

Check the appropriate box:

<TABLE>
<S> <C>
/ / Preliminary Proxy Statement
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>

HOME SHOPPING NETWORK, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)

HOME SHOPPING NETWORK, INC.
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)

Payment of filing fee (Check the appropriate box):

/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(I)(1), or 14a-6(j)(2).

/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(I)(3).

/ / Fee computed on table below per Exchange Act Rules 14a-6(I)(4) and 0-11.

(1) Title of each class of securities to which transaction applies:

(2) Aggregate number of securities to which transaction applies:

(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:

(4) Proposed maximum aggregate value of transaction:

/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing of which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.

(1) Amount previously paid:

(2) Form, schedule or registration statement no.:

(3) Filing party:

(4) Date filed:
<PAGE> 2

HOME SHOPPING NETWORK, INC.
2501 118TH AVENUE NORTH
ST. PETERSBURG, FLORIDA 33716

March 28, 1996

Dear Stockholder:

You are cordially invited to attend the annual meeting of stockholders of
Home Shopping Network, Inc. to be held at the Holiday Inn St.
Petersburg/Clearwater International Airport Hotel, 3535 Ulmerton Road,
Clearwater, Florida, on May 9, 1996, at 10:00 a.m., Eastern Daylight Time.

Matters to be considered and acted upon at the annual meeting include: (1)
the election of directors; (2) approval of the adoption of the 1996 Stock Option
Plan for Employees; (3) approval of the adoption of the 1996 Stock Option Plan
for Outside Directors; and (4) any other matters that may properly come before
the meeting.

Information concerning the matters to be considered and voted upon at the
annual meeting is set forth in the attached Notice of Annual Meeting of
Stockholders and Proxy Statement. We encourage you to review the attached
material carefully and complete, sign, date and promptly return the proxy card
in the enclosed postage paid envelope.

We appreciate your cooperation and hope to see you at the annual meeting.

Sincerely,

LOGO
James G. Held
President and Chief Executive Officer
<PAGE> 3

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 9, 1996

To Stockholders of Home Shopping Network, Inc.:

Notice is hereby given that the annual meeting (the "Annual Meeting") of
stockholders of Home Shopping Network, Inc. (the "Company") will be held at the
Holiday Inn St. Petersburg/Clearwater International Airport Hotel, 3535 Ulmerton
Road, Clearwater, Florida on May 9, 1996, at 10:00 a.m., Eastern Daylight Time
for the following purposes:

1. To elect seven directors of the Company to hold office until the
next Annual Meeting or their successors have been duly elected;

2. To approve the adoption of the 1996 Stock Option Plan for Employees
(the "New Employee Option Plan");

3. To approve the adoption of the 1996 Stock Option Plan for Outside
Directors (the "New Director Plan"); and

4. To act upon, as determined in the best judgment of the President
and Chief Executive Officer of the Company, any other matters that may
properly come before the annual meeting.

The close of business on March 15, 1996, has been fixed as the record date
(the "Record Date") for the meeting. All stockholders of record at that date are
entitled to vote at the meeting. A list of stockholders of record as of the
Record Date will be available for examination by stockholders prior to the
Annual Meeting at the offices of the Company, 2501 118th Avenue North, St.
Petersburg, Florida 33716.

By the Order of the Board of
Directors,

LOGO
Barry Augenbraun
Secretary

ALL HOLDERS OF COMMON STOCK ARE URGED TO COMPLETE, SIGN AND DATE THE
ENCLOSED PROXY AND PROMPTLY RETURN IT TO THE COMPANY IN THE ENCLOSED POSTAGE
PAID ENVELOPE. IF YOU ARE PRESENT AT THE MEETING AND DESIRE TO VOTE IN PERSON OR
FOR ANY REASON DESIRE TO REVOKE YOUR PROXY, YOU MAY DO SO AT ANY TIME BEFORE IT
IS VOTED.

PLEASE SIGN YOUR PROXY EXACTLY AS YOUR NAME APPEARS ON THE ENCLOSED PROXY
CARD.
<PAGE> 4

HOME SHOPPING NETWORK, INC.
2501 118TH AVENUE NORTH
ST. PETERSBURG, FLORIDA 33716
---------------------

PROXY STATEMENT
MARCH 28, 1996
---------------------

ANNUAL MEETING OF STOCKHOLDERS
MAY 9, 1996
---------------------

PLACE OF ANNUAL MEETING

The Annual Meeting will be held at the Holiday Inn St.
Petersburg/Clearwater International Airport Hotel, 3535 Ulmerton Road,
Clearwater, Florida on May 9, 1996, at 10:00 a.m., Eastern Daylight Time.

PURPOSE OF ANNUAL MEETING

At the Annual Meeting, stockholders will be asked to elect seven directors
to the Company's Board of Directors. Stockholders will also be asked to approve
the adoption of the New Employee Option Plan and the New Director Plan.

RECORD DATE; SHARES ENTITLED TO VOTE; QUORUM

Only holders of record of Home Shopping Network, Inc. Common Stock, $.01
par value (the "Common Stock"), and Class B Common Stock, $.01 par value (the
"Class B Common Stock"), at the close of business on March 15, 1996, will be
entitled to notice of, and to vote at, the Annual Meeting or any adjournment or
postponement thereof. As of the Record Date, there were 70,760,579 shares of
Common Stock (net of shares held in treasury), and 20,000,000 shares of Class B
Common Stock outstanding and entitled to vote and 8,023 stockholders of record.
The presence, either in person or by properly executed proxy, of the holders of
a majority of the outstanding shares of Common Stock and Class B Common Stock is
necessary to constitute a quorum for the matters to be submitted to stockholders
at the Annual Meeting. See "Solicitation And Voting."

REQUIRED VOTE

Each share of Common Stock entitles its holder to one vote and each share
of Class B Common Stock entitles its holder to ten votes, voting together with
the Common Stock as one class, on the matters to be considered by stockholders
at the Annual Meeting. The holders of Common Stock are entitled, however, to
elect 25% of the directors voting as a separate class. Holders of Common Stock,
voting as a separate class, are being asked to elect three directors, one more
than would be required under the Certificate of Incorporation. The holders of
Common Stock and the holders of Class B Common Stock shall together elect four
directors.
---------------------

THE PROXY MATERIAL IS BEING MAILED TO STOCKHOLDERS COMMENCING ON OR ABOUT APRIL
5, 1996.
<PAGE> 5

The Company's Bylaws provide that when a quorum is present at any meeting
of stockholders, the vote of the holders of a majority of the voting securities
having voting power present in person or represented by proxy shall be necessary
to decide a matter brought before the meeting. Abstentions and broker non-votes
will be counted as present for purposes of determining the presence or absence
of a quorum for the transaction of business. Abstentions and broker non-votes
will have the same effect as a negative vote with respect to matters submitted
for voting.

SOLICITATION AND VOTING

The enclosed proxy to be used at the Annual Meeting is solicited by, and on
behalf of, the Board of Directors of the Company. If a proxy is properly
executed and returned in the form enclosed, shares represented thereby will be
voted in favor of Items 1, 2 and 3 except to the extent other directions are
given in the proxy. Any other matters which may properly come before the Annual
Meeting will be considered and voted upon in the best judgment of the President
and Chief Executive Officer of the Company, James G. Held, who will serve as the
proxy agent.

Any stockholder who executes a proxy may revoke it at any time before it is
voted by notifying the President and Chief Executive Officer of the Company in
writing or by oral notice to the presiding officer during the Annual Meeting.

Expenses incurred in connection with the solicitation of proxies will be
paid by the Company. Upon request, the Company will reimburse brokers, dealers
and banks or their nominees, for reasonable expenses incurred in forwarding
copies of the proxy material and annual report to the beneficial owners of
shares which such persons hold of record. Solicitation of proxies will be made
principally by mail. Proxies may also be solicited in person, by telephone or
telecopier, by officers and employees of the Company. The Company has engaged
the services of Corporate Investor Communications at a cost of approximately
$5,000 in connection with services to be rendered prior to the Annual Meeting.

ANTICIPATED CHANGE IN CONTROL

On November 27, 1995, the Boards of Directors of the Company and Silver
King Communications, Inc. ("SKC"), approved the acquisition by SKC of a
controlling interest in the Company's capital stock from Tele-Communications,
Inc. ("TCI"). SKC would exchange 4,855,436 shares of newly issued common stock
and 6,082,000 newly issued shares of class B stock of SKC for 17,566,702 shares
of Common Stock and 20,000,000 shares of Class B Common Stock in a two step
transaction. In the first step, the Silver Management Company ("SMC"), an entity
controlled by Barry Diller in which Liberty Media Corporation ("Liberty"), a
wholly-owned subsidiary of TCI, owns a substantial equity stake, would acquire
TCI's interest in the Company through a merger of Liberty HSN, Inc., an indirect
wholly-owned subsidiary of TCI, with and into SMC. In the second step, the
Company's shares acquired by SMC in the Liberty/SMC merger would be immediately
exchanged for SKC securities pursuant to an exchange agreement dated as of
November 27, 1995 between SKC and SMC. Barry Diller serves as Chairman of the
Boards of Directors of the Company and SKC.

The proposed transaction is subject to the approval of the SKC shareholders
and final regulatory approvals which are expected to occur after the date of
this meeting. If the proposed transaction is consummated, SKC will acquire
approximately 41% of the Company's outstanding capital stock, representing
approximately 80% of the voting power of the Company's outstanding equity
securities. However, the holders of Common Stock voting alone will continue to
elect 25% of the Board of Directors.

2
<PAGE> 6

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth, as of March 15, 1996, information relating
to the beneficial ownership of the Company's Common Stock by (i) each person
known by the Company to own beneficially more than 5% of the outstanding shares
of Common Stock, (ii) each present director and nominee for election as a
director, (iii) the Company's Chief Executive Officer and the Executive Officers
(as such term is hereinafter defined), and (iv) all executive officers and
directors (including certain former executive officers) of the Company as a
group:

<TABLE>
<CAPTION>
NAME AND ADDRESS NO. OF PERCENT
OF BENEFICIAL OWNER SHARES OF CLASS
------------------------------------------------------------------ --------- ---------
<S> <C> <C>
Tele-Communications, Inc.(1)(2)................................... 17,566,702 24.8%
5619 DTC Parkway
Englewood, Colorado 80111
Silver King Communications, Inc.(3)............................... 0 --
12425 28th Street No., Suite 300
St. Petersburg, Florida 33716
Denver Investment Advisors LLC(4)................................. 4,790,600 6.8
1225 17th Street, 26th Floor
Denver, Colorado 80202
The Capital Group Companies, Inc.(5).............................. 4,560,000 6.4
333 South Hope Street
Los Angeles, California 90071
Barry Diller(6)................................................... 100,000 *
John C. Malone(7)................................................. 0 --
Peter R. Barton(7)................................................ 0 --
Robert R. Bennett(7).............................................. 2,000 *
John M. Draper(7)................................................. 20,000 *
J. Anthony Forstmann.............................................. 0 --
Leo J. Hindery, Jr.(8)............................................ 90,000 *
George C. McNamee(8).............................................. 100,000 *
H. Norman Schwarzkopf............................................. 0 --
Eli J. Segal(9)................................................... 1,668 *
James G. Held(10)................................................. 0 --
Honore A. Le Brun, III (11)....................................... 40,121 *
Barry S. Augenbraun(12)........................................... 35,452 *
Peter M. Kern(13)................................................. 100,000 *
Kevin J. McKeon(14)............................................... 43,700 *
Gerald F. Hogan................................................... 0 --
David F. Dyer (15)................................................ 1,500,082 2.1
Stella L. Tavilla (16)............................................ 114,950 *
All executive officers and directors as a group (20
persons)(17).................................................... 2,163,480 3.1
</TABLE>

- ---------------

* Percentage of shares beneficially owned does not exceed 1% of the class.

3
<PAGE> 7

The following table sets forth information relating to the beneficial
ownership of the Company's Class B Common Stock as of March 15, 1996:

- ---------------

(1) In addition to its 17,566,702 shares of Common Stock, TCI also is the
beneficial owner of 20,000,000 shares of Class B Common Stock. All or any
portion of such shares of Class B Common Stock may be converted at any time
into an equal number of shares of Common Stock. If TCI were to convert all
of its shares of Class B Common Stock into Common Stock, it would own
approximately 41% of the total number of shares of Common Stock
outstanding. By virtue of the fact that the shares of Class B Common Stock
are entitled to ten votes per share while the Common Stock is entitled to
one vote per share, TCI is the beneficial owner of shares representing
approximately 80% of the voting power of the outstanding equity securities
of the Company. The shares of Common Stock and Class B Common Stock
reported as beneficially owned by TCI in the above tables assume that none
of the shares of Class B Common Stock beneficially owned by TCI have been
converted into Common Stock. TCI has recently entered into certain
agreements, pursuant to which an entity in which TCI has an equity interest
would transfer all shares of Common Stock and Class B Common Stock
beneficially owned by it to SKC in exchange for securities of SKC. See Note
(3).
(2) Following consummation of the purchase of shares of the Company held by
TCI, it is currently expected that TCI, Mr. Diller and their respective
affiliates (including SMC) will collectively beneficially own 5,359,054
shares of SKC common stock and 8,082,000 shares of SKC class B stock, which
shares will constitute approximately 66% of the outstanding equity
securities of SKC. Such SKC securities would, by virtue of the fact that
the shares of SKC class B stock are generally entitled to ten votes per
share while the SKC common stock is entitled to one vote per share,
represent approximately 89% of the voting power of the outstanding equity
securities of SKC. Assuming the consummation of the above-referenced
transactions, Mr. Diller, through SMC, would control the majority of the
voting power of the outstanding SKC equity securities and, therefore, would
indirectly possess voting control of the Company.
(3) SKC has entered into an exchange agreement, pursuant to which, subject to
the satisfaction of certain conditions (including the consummation of the
Liberty/SMC merger), it has agreed to acquire the TCI Company Shares (which
consist of 17,566,702 shares of Common Stock and 20,000,000 shares of Class
B Common Stock). See "ANTICIPATED CHANGE IN CONTROL."
(4) Denver Investment Advisors LLC ("DIA"), a registered investment advisor,
exercised investment discretion with respect to 4,790,600 shares, or 6.8%
of the outstanding shares of the class, which were owned by various
institutional investors. DIA has sole voting power with respect to
3,112,900 shares of Common Stock.
(5) Capital Research and Management Company ("Capital"), a registered
investment advisor, and an operating subsidiary of the Capital Group
Companies, Inc., exercised investment discretion with respect

4
<PAGE> 8

to 4,560,000 shares, or 6.4% of the outstanding shares of the class, which
were owned by various institutional investors. Capital has no power to
direct the vote of these shares.
(6) Does not include 13,300,000 shares of Common Stock issuable upon exercise
of unvested options granted pursuant to the New Employee Option Plan that
is subject to stockholder approval. Mr. Diller was originally granted
13,400,000 shares of which 100,000 shares were returned to the Company.
(7) Messrs. Barton and Bennett and Dr. Malone serve as officers of Liberty; Mr.
Draper serves as a consultant to Liberty; Mr. Barton and Dr. Malone serve
as officers of TCI; and Dr. Malone serves as a director of TCI. The share
ownership totals for such persons do not include shares beneficially owned
by TCI. Does not include shares of Common Stock issuable upon conversion of
the Company's convertible subordinated debentures owned by Messrs. Barton
and Bennett, convertible into 6,250 and 12,500 shares of Common Stock,
respectively.
(8) Includes 90,000 shares of Common Stock issuable upon the exercise of vested
options granted pursuant to the 1986 Stock Option Plan for Outside
Directors (the "1986 Director Plan").
(9) Includes 1,668 shares of Common Stock issuable upon the exercise of vested
options granted pursuant to the New Director Plan that is subject to
stockholder approval. Does not include 3,332 shares of unvested options
granted pursuant to this plan.
(10) Does not include 2,500,000 shares of Common Stock issuable upon the
exercise of unvested options granted pursuant to the New Employee Option
Plan that is subject to stockholder approval.
(11) Includes 40,000 shares of Common Stock issuable upon the exercise of vested
options granted pursuant to the Company's 1986 Stock Option Plan for
Employees (the "1986 Employee Option Plan"). Includes 121 shares held in
the Company's Amended and Restated 401(k) Retirement Savings Plan (the
"401(k) Plan"). Does not include 60,000 shares of Common Stock issuable
upon exercise of unvested options granted pursuant to the 1986 Employee
Option Plan.
(12) Includes 33,333 shares of Common Stock issuable upon the exercise of vested
options granted pursuant to the 1986 Employee Option Plan. Does not include
66,667 shares of Common Stock issuable upon exercise of unvested options
granted pursuant to the 1986 Employee Option Plan. Includes 119 shares held
in the 401(k) Plan.
(13) Includes 100,000 shares of Common Stock issuable upon the exercise of
vested options granted pursuant to the 1986 Employee Option Plan. Mr.
Kern's employment with the Company terminated on March 1, 1996.
(14) Includes 39,200 shares of Common Stock issuable upon the exercise of vested
options granted pursuant to the 1986 Employee Option Plan; 4,000 shares of
Common Stock granted pursuant to the 1990 Executive Stock Award Program
(the "Award Program") and 500 shares held in the 401(k) Plan. Does not
include 56,800 shares of Common Stock issuable upon the exercise of
unvested options granted pursuant to the 1986 Employee Option Plan. Does
not include 164,300 unvested shares of Common Stock held by Mr. McKeon
solely as custodian under the Award Program.
(15) Includes 1,500,000 shares of Common Stock issuable upon the exercise of
vested options granted pursuant to the 1986 Employee Option Plan and 82
shares held in the 401(k) Plan. Mr. Dyer's employment with the Company
terminated on December 7, 1995, and as a result, these vested options will
expire on December 7, 1996, if not exercised. See "Employment Agreements."
(16) Includes 12,000 shares of Common Stock issuable upon the exercise of vested
options granted pursuant to the 1986 Employee Option Plan. Ms. Tavilla's
employment with the Company terminated on December 22, 1995.
(17) Includes 1,914,200 shares of Common Stock issuable upon the exercise of
vested options granted pursuant to the 1986 Director Plan, the 1986
Employee Option Plan and the New Director Plan.

5
<PAGE> 9

Includes 1,330 shares held in the 401(k) Plan. Includes 7,000 unvested
shares of Common Stock granted pursuant to the Award Program. Does not
include 16,052,800 shares of Common Stock issuable upon the exercise of
unvested options granted pursuant to the New Employee Option Plan, the 1986
Employee Option Plan and the New Director Plan.

ELECTION OF DIRECTORS

Seven directors are to be elected by the stockholders of the Company to
hold office until the next annual meeting or their respective successors have
been elected. It is intended that proxies granted by stockholders in the form
enclosed will be voted, unless otherwise directed, in favor of electing the
following persons as directors: Peter R. Barton, Robert R. Bennett, Barry
Diller, James G. Held, Leo J. Hindery, Jr., General H. Norman Schwarzkopf and
Eli J. Segal. Messrs. Hindery, Schwarzkopf and Segal have been designated by the
Board as nominees for the positions on the Board to be elected by holders of
Common Stock voting as a separate class. Election of the remaining directors
requires the favorable vote by the holders of a majority of the voting power
represented by the outstanding shares of Common Stock and Class B Common Stock,
voting as a single class, present in person or represented by proxy and entitled
to vote thereon at the meeting. In the event any nominee named herein for
election as a director at the Annual Meeting is not available or willing to
serve when the election occurs, proxies in the accompanying form may be voted
for a substitute as well as for the other persons named herein.

INFORMATION REGARDING DIRECTORS

An asterisk(*) indicates that a current director is not standing for
re-election.

PETER R. BARTON, 44, was appointed to the Board in August 1995. Mr. Barton
has served as President and Chief Executive Officer of Liberty since 1991 and
has served as an Executive Vice President of TCI since January 1994. Mr. Barton
also serves on the Boards of BET Holdings, Inc.; Discovery Communications, Inc.;
Encore Media Corporation; Liberty Sports, Inc. and Turner Broadcasting System,
Inc.

ROBERT R. BENNETT, 37, was appointed to the Board in February 1993. In
August 1993, he was named acting Chairman of the Board and from September 1993
to November 1995, he was Chairman of the Board. Mr. Bennett is Executive Vice
President, Chief Financial Officer, Treasurer and Secretary of Liberty. Mr.
Bennett joined Liberty in June 1990 as Vice President and Treasurer, was named
Secretary in October 1990 and Senior Vice President in September 1991. He was
named Executive Vice President in June 1995. Prior to joining Liberty, Mr.
Bennett served as Vice President of TCI.

BARRY DILLER, 54, was appointed to the Board in August 1995 and was named
Chairman of the Board in November 1995. He has been a Director and Chairman of
the Board and Chief Executive Officer of SKC since August 1995. He was Chairman
of the Board and Chief Executive Officer of QVC, Inc. from January 1993 until
February 1995. From 1984 to 1992, Mr. Diller served as the Chairman of the Board
and Chief Executive Officer of Fox, Inc. Prior to joining Fox, Mr. Diller served
for 10 years as Chairman of the Board and Chief Executive Officer of Paramount
Pictures Corporation, a subsidiary of Gulf + Western Corporation (now Paramount
Communications, Inc.). Mr. Diller also serves on the Board of the Museum of
Television and Radio, the Board of Directors for AIDS Project Los Angeles, the
Executive Board for the Medical Sciences of UCLA and is a member of the Board of
Councilors for the University of Southern California's School of
Cinema-Television.

*JOHN M. DRAPER, 57, was appointed to the Board in July 1993. Mr. Draper
served as Senior Vice President of Liberty from December 1991 until December
1995 at which time Mr. Draper resigned this position and entered into a
consulting agreement with Liberty. Prior to his employment by Liberty in

6
<PAGE> 10

December 1991, he was employed by TCI for more than five years, most recently as
Senior Vice President and General Counsel.

*J. ANTHONY FORSTMANN, 57, was appointed to the Board in April 1992. Mr.
Forstmann is Chairman of the Board of The National Registry Inc. ("NRI"). Mr.
Forstmann served as a Managing Director of J.A. Forstmann & Co., a Los
Angeles-based merchant banking firm, from October 1987 to October 1991. He
co-founded Forstmann-Leff Associates, an institutional money management firm, in
1968 and was a Managing Director thereof from its inception until October 1987.
Mr. Forstmann has been a Limited Partner of Forstmann Little & Co. since its
inception in 1978, and is also a director of Cities in Schools, a non-profit
corporation.

JAMES G. HELD, 45, was appointed to the Board in February 1996. He became
President and Chief Executive Officer of the Company in November 1995. From
January 1995 to November 1995, he served as President and Chief Executive
Officer of Adrienne Vittadini, Inc., an apparel manufacturer and retailer.
Between September 1993 and January 1995, he was a senior executive of QVC, Inc.,
first as Senior Vice President in charge of new business development and later
as Executive Vice President of merchandising, sales, product planning and new
business development. For eleven years prior to that, until September 1993, he
was employed in different executive positions at Bloomingdale's.

LEO J. HINDERY, JR., 48, was appointed to the Board in July 1993. Mr.
Hindery founded InterMedia Partners, a multi-system cable television operator,
in 1988 and has served as Managing General Partner and Chief Executive Officer
of InterMedia Partners and its affiliated entities ("InterMedia") since that
time. Prior to 1988, Mr. Hindery served as the Chief Officer for Planning and
Finance of The Chronicle Publishing Company. Prior to that, Mr. Hindery was
employed by Becker Paribas Incorporated as Chief Financial Officer and Managing
Director and earlier by Utah International, Inc. Mr. Hindery is a Director of
the Cable Telecommunications Association, the Cabletelevision Advertising
Bureau, Inc., the National Cable Television Association and C-Span.

*JOHN C. MALONE, 53, was appointed to the Board in August 1995. Dr. Malone
has served as President of TCI (including its predecessors) since 1973 and also
as Chief Executive Officer of TCI since 1992. Dr. Malone is a director of TCI,
Turner Broadcasting System, Inc., BET Holdings, Inc. and The Bank of New York.

*GEORGE C. MCNAMEE, 49, was appointed to the Board in July 1993. Mr.
McNamee is Chairman and Co-Chief Executive Officer of First Albany Companies,
Inc., the holding company for the investment banking firm, First Albany
Corporation. Mr. McNamee has worked in the securities business for almost 25
years. He serves as Chairman of the Committee on Clearance and Settlement of the
Securities Industry Association. Mr. McNamee is a Director of MapInfo
Corporation.

GEN. H. NORMAN SCHWARZKOPF, 64, was nominated to the Board in March 1996.
Since his retirement from the military in August 1991, General Schwarzkopf has
been an author, a participant in several television specials and is currently
working with NBC on additional television programs. From August 1990 to August
1991, he served as Commander-in-Chief, United States Central Command and
Commander of Operations, Desert Shield and Desert Storm. General Schwarzkopf has
35 years of service with the military. He is also on the Board of Governors of
the Nature Conservancy, Chairman of the Starbright Capital Campaign, co-founder
of the Boggy Creek Gang, a member of the University of Richmond Board of
Trustees, and serves on the Boards of Directors for Borg-Warner Security
Corporation, Remington Arms Company, Washington Water Power, Pentzer
Corporation, Kuhlman Corporation and Cap CURE, Association for the Cure of
Cancer of the Prostate.

7
<PAGE> 11

ELI J. SEGAL, 53, was appointed to the Board in February 1996. He served as
Assistant to the President of the United States from January 1993 to February
1996. In that connection, Mr. Segal was also confirmed by the United States
Senate as the first Chief Executive Officer of the Corporation for National
Service. Prior to that, Mr. Segal served as President of Bits & Pieces, Inc., a
direct mail consumer product company, from 1984 to January 1993, and publisher
of GAMES magazine, a monthly publication, from 1990 to January 1993.

The bylaws of the Company have been amended to provide for a Board of
Directors of seven persons. At the present time it is contemplated that
following consummation of the transactions referred to under "ANTICIPATED CHANGE
OF CONTROL" above, the size of the Board will be increased and Mr. Victor A.
Kaufman will be elected to the Board by the members of the Board in accordance
with the Company's bylaws.

Mr. Kaufman has served as Chairman and Chief Executive Officer of Savoy
Pictures Entertainment, Inc. since January 1992. From January 1990 to January
1992, he was an independent businessman. Mr. Kaufman was the founding Chairman
and Chief Executive Officer of Tri-Star Pictures, Inc. from 1983 until December
1987, at which time he became President and Chief Executive Officer of its
successor company, Columbia Pictures Entertainment, Inc. ("CPEI"). He resigned
these positions at the end of 1989 following the acquisition of CPEI by Sony
USA, Inc.

BOARD OF DIRECTORS

The Board of Directors of the Company held ten meetings during 1995 and
acted by unanimous written consent once.

AUDIT COMMITTEE

The Audit Committee, currently consisting of Messrs. Forstmann, Hindery and
McNamee, is empowered to recommend to the Board independent certified public
accounting firms for selection as auditors of the Company; make recommendations
to the Board on auditing matters; examine and make recommendations to the Board
concerning the scope of audits; and review and approve the terms of transactions
between the Company and related party entities. The Audit Committee consists of
those members of the Board who are elected by holders of Common Stock voting as
a separate class and any other directors selected by the Board. During 1995, the
Audit Committee met four times and acted by unanimous written consent three
times.

COMPENSATION/BENEFITS COMMITTEE

The Compensation/Benefits Committee (the "Compensation Committee"),
currently consisting of Messrs. Bennett, Draper and Hindery, is authorized to
make recommendations to the Board with respect to executive salaries and bonuses
and administers the 401(k) Plan, the 1986 Employee Option Plan, the Award
Program, the Employee Stock Purchase Plans for full-time and part-time employees
(the "Stock Purchase Plans"), and the Employee Equity Participation Plan, a
stock bonus plan for non-executive employees of the Company (the "Equity Plan").
The Compensation Committee will administer the New Employee Option Plan if it is
approved by the stockholders. The Compensation Committee met three times during
1995 and acted by unanimous written consent twice.

8
<PAGE> 12

EXECUTIVE COMMITTEE

The Executive Committee, currently consisting of Messrs. Barton, Bennett,
Diller and Hindery, is authorized, subject to certain limitations under Delaware
law, to exercise all of the powers of the Board in the management of the
business and affairs of the Company while the Board is not in session. The
Executive Committee met once and acted by unanimous written consent three times
during 1995.

NOMINATING COMMITTEE

The Nominating Committee, currently consisting of Messrs. Bennett and
Diller, is authorized to recommend nominees to fill vacancies on the Company's
Board and to recommend a slate of Directors to the stockholders of the Company
for election at the Annual Meeting. The Nominating Committee does not have a
policy with respect to the consideration of nominees recommended by
stockholders. The Nominating Committee acted by unanimous written consent once
during 1995.

EXECUTIVE OFFICERS

The following is a list of the current executive officers of the Company
who do not serve on the Board:

BARRY S. AUGENBRAUN, 56, was appointed Executive Vice President and General
Counsel of the Company in September 1994. Immediately prior to joining the
Company, he was an attorney in the law firm of Orrick, Herrington & Sutcliffe in
New York City from 1991 until September 1994. From 1974 to 1991, he served as
general counsel of the accounting firm of Laventhol & Horwath.

MARK BOZEK, 36, joined the Company in March 1996 as Executive Vice
President of Broadcasting. From June 1994 to February 1996, he served as Senior
Vice President of Programming and Broadcasting of Q2, a subsidiary of QVC, Inc.
From March 1993 to May 1994, he served as Vice President of Broadcasting of QVC,
Inc. From April 1991 to February 1993, he served as Producer of Fox News for
Fox, Inc.

BRIAN J. FELDMAN, 36, has served as Vice President and Controller since
March 1996. He served as Controller, Deputy Controller and Assistant Controller
for the Company from May 1989 to March 1996.

HONORE A. LE BRUN, III, 50, has been Executive Vice President of Affiliate
Sales since December 1993. Prior to joining the Company, he served as Senior
Vice President of TV Food Network from January 1993 to December 1993. Prior to
that appointment, he served concurrently as General Manager and President of
Meridian Broadcasting Corporation, which filed in 1991 for protection under the
Federal Bankruptcy Code, and General Manager and Vice President of Frey
Communications South.

KEVIN J. MCKEON, 39, has served as Executive Vice President, Chief
Financial Officer and Treasurer of the Company since February 1996. He served as
Senior Vice President of Accounting and Finance and Treasurer from December 1993
to February 1996. He served as Controller of the Company from July 1992 to
December 1993. Prior to that appointment, he served as Executive Director of
Finance from May 1991 to July 1992. From December 1986 to September 1990, he
served in various financial capacities for the Company.

MARY ELLEN POLLIN, 50, joined the Company in December 1995 as Executive
Vice President of Administration. From July 1995 to December 1995, she served as
Executive Director of Russell Reynolds Associates, an executive recruiting firm.
From July 1993 to June 1995, she served as Vice President of

9
<PAGE> 13

J.D. Ross International. From May 1990 to June 1993, she was Director of
Recruitment and Executive Placement at Barneys New York. From 1988 to 1990, she
served as Vice President, Human Resources of Conran's Habitat. During the nine
years prior to this, Ms. Pollin worked for Bloomingdales in various human
resource capacities.

COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS

COMPENSATION OF OUTSIDE DIRECTORS

The Company pays an annual fee of $30,000 to each director who is not
employed by the Company or an affiliate of the Company. It also pays each
director $1,000 for each meeting of the Board which he attends or $5,000 for
each non-telephonic meeting in excess of six meetings (excluding telephonic
meetings) in a year. Furthermore, the Company pays each member of a committee of
the Board who is not employed by the Company as an officer $1,000 for each
meeting of a committee of the Board which he attends ($500 if in conjunction
with a Board meeting). Each member of the Board who is also an employee of an
affiliate is paid an annual fee of $10,000 and $1,000 for each Board or
committee meeting which he attends ($500 for a committee meeting if in
conjunction with a Board meeting). Each director is reimbursed for all
reasonable expenses incurred in connection with attending any meeting of the
Board.

Prior to 1996, the directors who were not employees of the Company
participated in the 1986 Director Plan pursuant to which each director was
granted an option to purchase 90,000 shares of Common Stock upon election to the
Board at an exercise price equal to the closing price of the Company's Common
Stock on the date of election. These options become exercisable in three equal,
annual increments beginning on the date of grant. Each option expires five years
after it becomes exercisable. Directors commencing a sixth year of service on
the Company's Board were granted an option to purchase an additional 90,000
shares of Common Stock on similar terms. All options granted to a director under
the 1986 Director Plan expire 30 days after resignation or termination as a
director. Under the 1986 Director Plan, options to purchase 180,000 shares of
Common Stock at an exercise price of $14.75 are held by two directors. Messrs.
Barton, Bennett, Diller, Draper and Malone waived their rights to participate in
the 1986 Director Plan.

The 1986 Director Plan expires on July 31, 1996. If stockholders approve
the New Director Plan, no further options will be granted under the 1986
Director Plan. See "1996 STOCK OPTION PLAN FOR OUTSIDE DIRECTORS."

The Company is entering into a consulting agreement with General H. Norman
Schwarzkopf pursuant to which he will be granted options for 50,000 shares of
the Company's Common Stock exercisable for a ten year period. The price of these
options has not yet been determined. These shares will be in addition to shares
granted to General Schwarzkopf pursuant to the New Director Plan.

10
<PAGE> 14

SUMMARY OF EXECUTIVE OFFICER COMPENSATION

The following sets forth the annual and long-term compensation for services
to the Company for the years ended December 31, 1995, 1994, and 1993, of those
persons (the "Executive Officers") who were during the year ended December 31,
1995, (i) serving as the Company's Chief Executive Officer or acting in a
similar capacity, (ii) the other four most highly compensated officers employed
by the Company at the end of the year, and (iii) one former executive officer.

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
ANNUAL COMPENSATION -------------------------
-------------------------------------- RESTRICTED SECURITIES
OTHER ANNUAL STOCK UNDERLYING ALL OTHER
SALARY BONUS COMPENSATION AWARDS OPTIONS/SARS COMPENSATION
NAME & PRINCIPAL POSITION YEAR ($) ($) ($)(1) ($)(2) (#)(3) ($)
- --------------------------------- ---- ------- ------ ------------ ---------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
James G. Held.................... 1995 44,230 -- -- -- 2,500,000 111(9)
President and Chief Executive 1994 -- -- -- -- -- --
Officer(4) 1993 -- -- -- -- -- --
Honore A. Le Brun, III........... 1995 241,870 75,000 -- -- -- 1,130(10)
Executive Vice President 1994 199,195 75,000 -- -- -- 502(9)
Affiliate Sales 1993 20,192 -- -- -- 100,000 44(9)
Barry S. Augenbraun.............. 1995 225,000 50,000 -- -- -- 1,087(10)
Executive Vice President and 1994 70,961 -- 11,515 -- 100,000 179(9)
General Counsel(5) 1993 -- -- -- -- -- --
Peter M. Kern.................... 1995 164,230 31,250 -- -- -- 414(9)
Chief Admin. Officer, SVP 1994 123,653 20,000 -- -- -- 312(9)
Strategic Dev. & Corp. Finance 1993 71,653 20,000 -- -- 100,000 155(9)
Kevin J. McKeon.................. 1995 164,711 -- -- -- -- 945(10)
Executive Vice President, Chief 1994 151,731 -- -- -- 29,000 902(10)
Financial Officer and Treasurer 1993 95,805 -- -- -- 58,000 727(10)
Gerald F. Hogan.................. 1995 340,000 -- -- -- -- 791,377(11)
Former President and Chief 1994 500,000 -- 98,685 -- -- 1,780(10)
Executive Officer(6) 1993 432,692 -- 120,436 -- 984,876 935(9)
David F. Dyer.................... 1995 723,460 -- -- -- -- 2,343,831(12)
Former President and Chief 1994 663,110 -- -- -- 1,500,000 388(9)
Operating Officer(5)(7) 1993 -- -- -- -- -- --
Stella L. Tavilla................ 1995 218,788 -- -- -- -- 20,301(13)
Former Chief Info. Officer and 1994 175,692 -- -- -- 60,000 963(10)
Executive Vice President, 1993 160,000 -- -- -- -- 866(10)
MIS(8)
</TABLE>

- ---------------

(1) Disclosure of perquisites and other personal benefits, securities or
property received by an Executive Officer is required only in the event
that the aggregate amount of such compensation exceeds the lesser of
$50,000 or 10% of the total of the Executive Officer's salary and bonus for
the year. The amounts set forth in this column represent reimbursements for
relocation expenses and related taxes.
(2) During 1990, the Company's then Chairman and Chief Executive Officer, and
its President contributed 2,990,000 shares of Common Stock to fund the
Executive Stock Award Program. These shares were granted to various
employees of the Company and each grant vests in five equal, annual

11
<PAGE> 15

installments. Mr. McKeon has 4,000 unvested shares granted under the Award
Program with a value of $36,000 based on the closing price of the Company's
Common Stock on December 31, 1995. No grants were made under the Award
Program in 1993, 1994 and 1995.
(3) The amount listed represents the total number of shares of Common Stock
underlying the options or SARs which were granted to the Executive Officer
in that year.
(4) Mr. Held was not employed by the Company until November 1995.
(5) These Executive Officers were not employed by the Company until 1994.
(6) Mr. Hogan's employment with the Company terminated on August 24, 1995. See
"Employment Agreements."
(7) Mr. Dyer's employment with the Company terminated on December 7, 1995. See
"Employment Agreements."
(8) Ms. Tavilla's employment with the Company terminated on December 22, 1995.
(9) Represents the premiums paid by the Company to provide term life insurance.
No cash surrender value is generated under these policies.
(10) Includes $520 which represents the purchase price of shares of Common Stock
allocated under the 401(k) Plan. The remainder of this amount represents
the premiums paid by the Company to provide term life insurance. No cash
surrender value is generated under these policies.
(11) Includes a payment of $790,000 in connection with the termination of
employment. See "Employment Agreements." Includes $520 which represents the
purchase price of shares of Common Stock allocated under the 401(k) Plan.
The remainder of this amount represents the premiums paid by the Company to
provide term life insurance. No cash surrender value is generated under
these policies.
(12) Includes a payment of $2,073,779 in connection with the termination of
employment and $268,367 for the forgiveness of a loan plus accrued
interest. See "Employment Agreements." Includes $520 which represents the
purchase price of shares of Common Stock allocated under the 401(k) Plan.
The remainder of this amount represents the premiums paid by the Company to
provide term life insurance. No cash surrender value is generated under
these policies.
(13) Includes $19,230 in unused vacation and sick leave benefits paid to Ms.
Tavilla upon termination of employment. Includes $520 which represents the
purchase price of shares of Common Stock allocated under the 401(k) Plan.
The remainder of this amount represents the premiums paid by the Company to
provide term life insurance. No cash surrender value is generated under
these policies.

12
<PAGE> 16

OPTION GRANTS

Set forth below is information with respect to options to purchase the
Company's Common Stock granted to the Executive Officers during 1995 under the
New Employee Option Plan, subject to stockholder approval. No options were
granted to the Executive Officers during 1995 under the 1986 Employee Option
Plan.

OPTION GRANTS IN LAST FISCAL YEAR

<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE
AT ASSUMED ANNUAL RATES
NUMBER OF % OF TOTAL OF STOCK PRICE
SECURITIES OPTIONS EXERCISE APPRECIATION FOR
UNDERLYING GRANTED OR BASE OPTION TERM(3)
OPTIONS IN THE PRICE EXPIRATION -----------------------
NAME GRANTED(#) FISCAL YEAR(2) ($/SH) DATE 5%($) 10%($)
- -------------------------- ---------- -------------- -------- ------------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
James G. Held(1).......... 2,500,000 15.48% 8.5 Nov. 24, 2005 13,364,011 33,867,027
Honore A. Le Brun, III.... -- -- -- -- -- --
Barry S. Augenbraun....... -- -- -- -- -- --
Peter M. Kern............. -- -- -- -- -- --
Kevin J. McKeon........... -- -- -- -- -- --
Gerald F. Hogan........... -- -- -- -- -- --
David F. Dyer............. -- -- -- -- -- --
Stella L. Tavilla......... -- -- -- -- -- --
</TABLE>

- ---------------

(1) Mr. Held's options under the New Employee Option Plan become exercisable in
four equal, annual installments commencing one year from the grant date.
See "Employment Agreements."
(2) Total options granted during 1995 consisted of 195,000 options to purchase
the Company's Common Stock under the 1986 Employee Option Plan and
15,950,000 options to purchase the Company's Common Stock under the New
Employee Option Plan (subject to stockholder approval), of which 13,400,000
options were granted to Mr. Diller when he became Chairman of the Board.
(3) Potential realizable values are reported net of the option exercise price,
but before taxes. These amounts represent certain assumed rates of
appreciation and assumed holding periods. Actual gains, if any, on stock
option exercise will be dependent upon the future performance of the Common
Stock as well as the option holder's continued employment through the
vesting period. The amounts reflected in this table may not necessarily be
achieved.

13
<PAGE> 17

OPTION AND SAR EXERCISES

Set forth below is information with respect to exercises of options under
the 1986 Employee Option Plan and stock appreciation rights ("SARs") by the
Executive Officers during 1995 and the year end value of all unexercised options
held by these persons.

AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION VALUES

<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT FISCAL IN-THE-MONEY OPTIONS
SHARES YEAR END(#) AT FISCAL YEAR END($)(1)
ACQUIRED ON VALUE --------------------------- ---------------------------
NAME EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---------------------------- ----------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
James G. Held............... 0 0 0 2,500,000 0 1,250,000
Honore A. Le Brun, III(2)... 0 0 40,000 60,000 -- --
Barry S. Augenbraun(2)...... 0 0 33,334 66,666 -- --
Peter M. Kern............... 0 0 40,000 60,000 20,000 30,000
Kevin J. McKeon(3).......... 0 0 39,200 56,800 45,396 22,698
Gerald F. Hogan(4).......... 984,876 1,846,642 0 0 0 0
David F. Dyer(2)(4)......... 0 0 1,500,000 0 -- 0
Stella L. Tavilla(2)(5)..... 36,000 136,872 12,000 0 -- 0
</TABLE>

- ---------------

(1) Represents the difference between the closing price of the Company's Common
Stock on December 31, 1995 and the exercise price of the option.
(2) The exercise price of the option was greater than the market closing price
of the Common Stock on December 31, 1995.
(3) Mr. McKeon holds options that were granted on different dates. The value of
in-the-money options at year end reflects only those options where the
closing price of the Company's Common Stock at December 31, 1995 was
greater than the exercise price of the options.
(4) Mr. Hogan's and Mr. Dyer's employment with the Company terminated during
1995. See "Employment Agreements."
(5) Ms. Tavilla's employment with the Company terminated on December 22, 1995.
Options to purchase 48,000 shares of Common Stock granted on November 17,
1994 were canceled on December 22, 1995.

EMPLOYMENT AGREEMENTS

Mr. Held and the Company entered into a four year employment agreement as
of November 24, 1995 providing for an annual base salary of not less than
$500,000 and an annual bonus of at least $150,000. If the earnings for the
Company and its subsidiaries on a consolidated basis before interest, taxes,
depreciation, amortization and any net extraordinary gains or losses of the
Company in any fiscal year (EBITDA) exceeds the target EBITDA as set by the
Board of Directors from time to time, the annual bonus is increased to $250,000
plus 1.25% of the excess. Mr. Held received stock options for 2,500,000 shares
of the Company's Common Stock at an exercise price of $8.50 per share, which
vest equally over a four year period and are exercisable until November 24,
2005. The agreement provides for differing vesting and exercise rights upon
termination of employment. The Company reimbursed Mr. Held for relocation
expenses and agreed to lend him $1,000,000 for the purpose of purchasing a
residence in the Tampa/St. Petersburg area. In the event that,

14
<PAGE> 18

after completion of improvements to be undertaken within a reasonable period of
time following the purchase of the residence, the fair market value of the
residence is less than $800,000, Mr. Held is required to repay a portion of the
principal amount of the loan in an amount equal to the difference. The loan
bears interest at 5% per annum and the principal and any accrued and unpaid
interest become due and payable, in the event that Mr. Held is terminated for
any reason, on the first anniversary of such termination, or immediately in the
event that the residence is sold or transferred. To date, the loan has not been
made to Mr. Held. In addition, Mr. Held is entitled to the use of a luxury
automobile supplied to him by the Company at its expense. Mr. Held's agreement
is automatically renewable for one year terms at the end of the initial term
unless terminated upon 180 days' notice by either party.

Mr. Augenbraun and the Company entered into a three year employment
agreement as of September 1, 1994 providing for an annual base salary of not
less than $225,000 and a guaranteed bonus in the first year of $50,000. He
received options to purchase 100,000 shares of the Company's Common Stock at an
exercise price of $11.75, which vest over a three year period and are
exercisable until September 1, 2004. The agreement provides for differing
vesting and exercise rights on termination of employment. The agreement is
automatically renewable for one year terms at the end of the initial term unless
notice is given by April 30 in each year by either party.

Termination of the above employment agreements by the Company other than
for cause will result in payment of the annual base salary amount that would
have been payable had employment with the Company continued until the expiration
of the employment term plus any annual bonus for the year of termination. In
addition, termination of employment following a change of control may result in
entitlement to all unpaid compensation through the remaining term of the
contract.

In 1995, Mr. Hogan's employment with the Company terminated. Under the
terms of his employment agreement, he was paid a lump sum distribution of
$790,000 and immediately vested in SARs for 984,876 shares of Common Stock,
which he exercised and for which he received $1,846,642.

In 1995, Mr. Dyer's employment with the Company terminated. Under the terms
of his employment agreement, he was paid a lump sum distribution of $2,073,779
and $268,367 for the forgiveness of a loan plus accrued interest and immediately
vested in options totaling 1,500,000 shares of Common Stock at an exercise price
of $11.50 per share, granted pursuant to the 1986 Employee Option Plan which are
exercisable until December 7, 1996.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

Messrs. Bennett and Draper, each of whom is an officer of Liberty, serve
with Mr. Hindery on the Compensation Committee. See "CERTAIN TRANSACTIONS AND
BUSINESS RELATIONSHIPS."

On April 28, 1992, the Company purchased 100,000 non-voting shares of
Series A Preferred Stock, par value $.01 per share, of NRI for $10,000,000 in
cash and services. The shares of Series A Preferred Stock are convertible into a
total of 6,336,154 shares of NRI common stock and contain certain liquidation
preferences. J. Anthony Forstmann, the Chairman of NRI, was subsequently
appointed to the Board of the Company. At December 31, 1995, Peter M. Kern
served on the Board of Directors of NRI. Mr. Kern was granted options to
purchase 45,000 shares of common stock of NRI at an exercise price of $3.75 per
share which vest in equal installments over a three year period commencing
August 12, 1994. During 1995, NRI paid approximately $120,000 to the Company for
rent and services.

15
<PAGE> 19

In the normal course of conducting its electronic retailing business, the
Company's principal operating subsidiary, HSC, enters into agreements with the
operators of cable television systems and broadcast television stations for the
carriage of HSC programming. During 1994, HSC entered into agreements with cable
operators which are affiliates of TCI. These long-term contracts provide for a
minimum subscriber guarantee and incentive payments based on the number of
subscribers. Payments under these contracts in 1995 were approximately
$28,869,000 for cable distribution fees and $6,832,000 for cable commissions and
advertising. The Company received $896,000 from TCI in connection with the
sublease of a satellite transponder. Messrs. Barton and Bennett, and Dr. Malone,
who serve on the Board, are officers of Liberty and Dr. Malone serves as a
director of TCI. Mr. Draper serves as consultant to Liberty and is also on the
Board.

HSC's programming is carried by cable systems which are operated by
InterMedia. Mr. Hindery is the Managing General Partner and CEO of InterMedia
and TCI has an approximate 49% limited partnership interest in InterMedia. HSC
and InterMedia entered into cable carriage agreements both prior and subsequent
to Mr. Hindery's appointment to the Board on terms and conditions which are
consistent with HSC's other cable agreements. In 1995, the Company received
$154,000 from InterMedia for the rebate of cable distribution fees under the
payback provisions of one of the affiliation agreements and payments to
InterMedia by the Company for cable commissions and advertising were $317,000 in
1995.

COMPENSATION/BENEFITS COMMITTEE REPORT TO SHAREHOLDERS

The Compensation Committee is responsible for establishing the Company's
executive compensation policy, setting compensation and related performance
goals for the Company's senior executives and administering the Company's 401(k)
Plan, the 1986 Employee Option Plan, the New Employee Option Plan, the Award
Program, the Stock Purchase Plan and the Equity Plan.

The goal of the Compensation Committee is to attract and retain highly
qualified executive officers and key employees in a manner which will enhance
stockholder value. The Compensation Committee believes that a link should exist
between executive compensation and appreciation in the price of the Company's
Common Stock. The Compensation Committee believes that it has followed this
strategy by developing and implementing a compensation policy which seeks to
attract talented executives and to align the financial interests of the
Company's senior executives with those of its stockholders. The Company attempts
to realize these goals by providing a competitive compensation package by
permitting executive officers to obtain an ownership stake in the Company
commensurate with their relative levels of experience and responsibility.

In establishing compensation for the senior executive officers, the
Compensation Committee follows its belief that the total compensation package
should be at or near median market rates in the telecommunications and retail
industries for seasoned executives with the appropriate business experience and
acumen. Compensation for executives is reviewed periodically by the Compensation
Committee and may be adjusted based, among other things, on a subjective
determination that an individual's contribution to the Company has increased and
on increases in median competitive pay levels.

Periodic grants of stock options to executive officers and other key
employees which vest over time are intended to foster a long-term commitment to
the Company and motivate executives to improve long-term stock market
performance. Stock options have been granted under the 1986 Employee Option Plan
at the prevailing market value and permit the holder to participate in increases
in the Company's Common Stock price following the date of grant. Generally,
grants vest in equal amounts over five years, and executives must be employed by
the Company to vest in the options. During the year, options to purchase 195,000
shares of Common Stock were granted with exercise prices ranging from $6.75 to
$9.00 to employees under the 1986

16
<PAGE> 20

Employee Option Plan. In addition, 15,950,000 options were granted to executive
officers under the New Employee Option Plan, 13,400,000 of which were granted to
Mr. Diller, 2,500,000 to Mr. Held and 50,000 to Ms. Pollin, all at an exercise
price of $8.50. See "1996 STOCK OPTION PLAN FOR EMPLOYEES." In determining the
number of options to grant to a particular employee, the Compensation Committee
relies heavily on recommendations of management which are based on a number of
factors, including job responsibility, salary, title, the number of options
previously granted and tenure with the Company. Then, the Committee makes a
subjective determination as to whether the recommendation of management is
appropriate.

Shares of stock have been granted to a broad spectrum of employees,
including executive officers, under the Award Program. Both management and the
Compensation Committee have from time to time in the past made, and may, in the
future, make a subjective determination as to the number of shares to grant to a
particular employee. The shares granted under the Award Program vest equally
over a period of five years. No previously forfeited shares were reallocated
under the Award Program during 1995.

The Compensation Committee primarily contrasts the Company's Stock Price
Performance Graph with the Standard and Poor's Retail Specialty Index as the
Company's peer group. However, due to the hybrid nature of the Company's
business, which is based on the telecommunications industry as well as the
retail industry, the Compensation Committee believes that it is appropriate to
also consider compensation based on comparable levels in both industries. As a
consequence, management and the Compensation Committee do not restrict
compensation comparisons to the Standard and Poor's Retail Specialty Index.

The Compensation Committee also considers performance-based bonuses for
certain selected employees. An executive bonus program was adopted in 1995 based
on the Company achieving specific operating cash flow levels which were not
satisfied and, therefore, no bonuses were paid under this program in 1995. The
Committee anticipates that management will develop a bonus program for 1996. The
specific elements of the plan have not yet been formulated.

Mr. Held became President and Chief Executive Officer of the Company in
November 1995. Consistent with the Company's philosophy of linking executive
compensation closely to enhanced stockholder value, Mr. Held's compensation is
significantly dependent upon both the market performance of the Company's Common
Stock through the grant of stock options and increases in the pre-tax earnings
of the Company through bonus payments tied to achieving targeted levels of
EBITDA as set by the Board of Directors. Mr. Held's compensation package,
including the grant of stock options to purchase 2,500,000 shares of the
Company's Common Stock, was negotiated between the Company and Mr. Held.

Generally, the Compensation Committee expects that the compensation
packages granted to executives will be consistent with the limits established by
the Internal Revenue Code Section 162(m), which generally limits the corporate
tax deduction for compensation paid to certain executive officers to $1,000,000.

Compensation/Benefits Committee

Robert R. Bennett
John M. Draper
Leo J. Hindery, Jr.

17
<PAGE> 21

STOCK PRICE PERFORMANCE GRAPH

The Stock Price Performance Graph below shall not be deemed incorporated by
reference by a general statement incorporating by reference this proxy statement
into any filing under the Securities Act or under the Exchange Act, except to
the extent the Company specifically incorporates this information by reference,
and shall not otherwise be deemed filed under such Acts.

The graph below compares cumulative total return of the Company's Common
Stock, Standard & Poor's 500 Index and Standard & Poor's Retail Specialty Index
(the "Peer Group").

HOME SHOPPING NETWORK, INC. STOCK PRICE PERFORMANCE

COMPARATIVE FIVE YEAR TOTAL RETURNS*
HOME SHOPPING NETWORK, S&P 500, PEER GROUP
(PERFORMANCE THROUGH DECEMBER 31, 1995)

<TABLE>
<CAPTION>
MEASUREMENT PERIOD
(FISCAL YEAR COVERED) HSN S & P 500 PEER GROUP
<S> <C> <C> <C>
1990 100.00 100.00 100.00
1991 146.88 130.55 160.82
1992 213.75 140.72 180.48
1993 415.94 154.91 184.51
1994 279.62 157.39 155.10
1995 251.66 216.42 148.40
</TABLE>

Assumes $100 invested at the close of trading on the last trading day preceding
the first day of the fifth preceding fiscal year in HSN common stock, S&P 500,
and Peer Group.
- ---------------

* Cumulative total return assumes reinvestment of dividends.
Source: Value Line, Inc.

18
<PAGE> 22

CERTAIN TRANSACTIONS AND BUSINESS RELATIONSHIPS

Liberty has an assignable, irrevocable option to purchase a controlling
interest in SKC exercisable through February 11, 1999. The exercise price of the
option is $1.75 per share through February 11, 1997, with the exercise price
increasing in the amount of $.25 each year thereafter.

As a result of the transaction described under "ANTICIPATED CHANGE OF
CONTROL," Mr. Diller would acquire indirect voting control of the Company
through his voting interest in SKC. The consummation of these transactions is
subject to a number of conditions including, but not limited to, the receipt of
necessary regulatory approvals and SKC stockholder approval.

HSC has affiliation agreements with stations owned by SKC for carriage of
the Company's programming. The Company's expense under these agreements in 1995
was approximately $41,332,000.

During 1994, a subsidiary of the Company and Black Entertainment
Television, Inc. ("BET") entered into an agreement to promote a direct response
marketing program and a shop-at-home show concept known as BET Shop. The parties
continue to test the BET Shop concept. TCI beneficially owns an 18.3% interest
in BET.

See "COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS -- Compensation
Committee Interlocks and Insider Participation."

1996 STOCK OPTION PLAN FOR EMPLOYEES

OVERVIEW

On February 12, 1996, the Board of Directors of the Company adopted,
subject to stockholder approval, a stock option plan (the "New Employee Option
Plan") pursuant to which full-time employees of the Company may be granted
options to purchase Common Stock of the Company or exercise SARs. The plan is
intended to provide full-time employees of the Company or its subsidiaries with
an incentive for their continued employment and to promote the interest of the
Company and its stockholders and will replace the 1986 Employee Option Plan
which expires on July 31, 1996. Under the New Employee Option Plan, the Chairman
of the Board and consultants to the Company are also eligible to receive
options. A total of 18,700,000 shares of the Company's Common Stock have been
reserved for issuance under this plan and the New Director Plan. The
Compensation Committee will administer the plan. To date, options have been
granted to purchase 15,950,000 shares of Common Stock at $8.50 per share, none
of which have been accompanied by SARs.

The New Employee Option Plan authorizes the Compensation Committee to grant
incentive stock options ("ISOs") or nonqualified stock options ("NSOs"). All
shares available under the plan are subject to adjustments that may be made by
the Compensation Committee for a merger, recapitalization, stock dividend, stock
split or other similar change affecting the number of outstanding shares of
Common Stock of the Company.

The exercise price of a share of stock pursuant to an option granted under
the plan will be established in the sole discretion of the Board, except the
exercise price per share for an ISO will be at least equal to the fair market
value of the stock on the date the ISO is granted. The purchase price for such
shares may be paid in cash or by tender by the option holder of shares of Common
Stock of the Company. At the discretion of the Compensation Committee, a grant
may include SARs which permit the optionee to receive a cash payment

19
<PAGE> 23

from the Company equal to the excess of the fair market value of the stock on
the date of exercise over the fair market value of the stock on the date of
grant.

Unless otherwise provided by the Compensation Committee, options vest over
five years, and are exercisable for ten years. Upon termination for reasons
other than disability, vested options must be exercised within six months. Upon
disability, vested options must be exercised within three months following
termination of service. Unvested options also will vest upon the occurrence of a
change in control of the Company, as defined. The Compensation Committee may, at
any time, terminate, suspend or amend the plan subject to any required
stockholder or regulatory approval.

Upon approval of the New Employee Option Plan, no further options will be
granted under the 1986 Employee Option Plan; options for 2,700,000 shares of
Common Stock available for issuance thereunder will terminate.

FEDERAL INCOME TAX MATTERS

The tax consequences of the Plan generally will be as follows:

No tax is imposed on the optionee and no deduction is available to the
Company at the time of grant of an ISO or a NSO. Under the present Internal
Revenue Code, the federal income tax consequences of the exercise of an option
under the plan to purchase Common Stock of the Company, and of the sale of such
shares of Common Stock, will depend upon whether the option is an ISO or a NSO.
Upon the exercise of a NSO, the optionee will be treated as receiving
compensation equal to the excess of the fair market value of the shares at the
time of exercise over the option price. The Company will be entitled to a
deduction equal to the amount of compensation received by the optionee.

If an optionee exercises a NSO by delivering to the Company shares of
Common Stock of the Company, the optionee will be treated as receiving
compensation equal to the excess of the fair market value on the date of
exercise of the stock received over the fair market value on the date of
exercise of the stock surrendered. The optionee's basis in the shares of stock
received will be equal to the optionee's basis in the shares of stock
surrendered plus the amount included in income upon the exercise of the NSO.

As a general matter, no tax is imposed on the optionee and no deduction is
available to the Company upon the exercise of an ISO if the optionee (i) was an
employee of the Company or a subsidiary within three months prior to the date of
exercise (within one year if the optionee is disabled), and (ii) does not sell
the shares thereby acquired within two years from the date of grant or one year
from the date of exercise. If a deceased optionee's estate exercises an ISO,
such employment and holding period requirements are not applicable. Upon the
sale of shares received pursuant to the exercise of an ISO following the
expiration of the applicable holding periods, the excess of the sales proceeds
over the exercise price shall be treated as a "long-term capital gain" to the
optionee. Such a sale will not entitle the Company to a deduction. If an
optionee disposes of ISO shares prior to the expiration of the applicable
holding periods (or if the option is otherwise disqualified from receiving ISO
treatment), the federal income tax consequences of the exercise of an ISO and of
the sale of such shares will be similar to the tax consequences resulting from
the exercise of a NSO.

Upon the receipt of SARs pursuant to either an ISO or a NSO, the optionee
will be treated as receiving compensation equal to the amount of the SARs (i.e.,
the excess of the fair market value of the stock on the date of exercise over
the fair market value of the stock on the date of grant). The Company will be
entitled to a deduction equal to the amount of compensation received by the
optionee.

20
<PAGE> 24

NEW PLAN AWARDS

The following sets forth the options granted under the New Employee Option
Plan to (i) each of the current executive officers including the CEO, (ii) all
current executive officers as a group, (iii) all directors who are not executive
officers as a group, and (iv) all other employees as a group.

<TABLE>
<CAPTION>
EXERCISE PRICE NUMBER OF
NAME PER SHARE ($)(1) SHARES
---------------------------------------------------------- ---------------- ----------
<S> <C> <C>
James G. Held............................................. $ 8.50 2,500,000
Barry S. Augenbraun....................................... -- --
Brian J. Feldman.......................................... -- --
Honore A. Le Brun, III.................................... -- --
Kevin J. McKeon........................................... -- --
Mary Ellen Pollin......................................... $ 8.50 50,000
All current executive officers as a group................. $ 8.50 2,550,000
Non-executive director group(2)........................... $ 8.50 13,400,000
Non-executive officer employee group...................... -- --
</TABLE>

- ---------------

(1) It is not possible to determine the value of these benefits because the
benefits will depend upon exercise decisions by participants and the fair
market value of the Company's Common Stock at various future dates following
the adoption of the proposed New Employee Option Plan.
(2) Mr. Diller, the Company's Chairman, was granted options to purchase
13,400,000 shares of the Company's Common Stock in 1995. On February 12,
1996, Mr. Diller returned options for 100,000 shares to the Company. The
Board of Directors granted options for 100,000 shares at an exercise price
of $11.125 (closing price of the Company's Common Stock on the day prior to
the grant date) to Victor A. Kaufman, as a consultant to the Company.

The Board of Directors recommends the approval of the New Employee Option
Plan. Proxies solicited by the Board of Directors will be so voted unless
stockholders specify otherwise in their proxies. Approval requires a favorable
vote by a majority of the voting power represented by the outstanding shares of
Common Stock and Class B Common Stock present in person or represented by proxy
and entitled to vote thereon at the meeting.

1996 STOCK OPTION PLAN FOR OUTSIDE DIRECTORS

OVERVIEW

On February 12, 1996, the Board of Directors of the Company adopted a stock
option plan pursuant to which members of the Board of Directors who are not
employees of the Company are granted options to purchase Common Stock of the
Company. The 1996 Stock Option Plan for Outside Directors (the "New Director
Plan") is intended to provide directors of the Company who are not employees
with an incentive for their continued service on the Board of Directors. A total
of 18,700,000 shares of Common Stock have been reserved for issuance under the
New Employee Option Plan and the New Director Plan. The Company's 1986 Stock
Option Plan for Outside Directors is scheduled to expire this year and no
further options will be awarded thereunder if the New Director Plan is approved.

21
<PAGE> 25

The New Director Plan provides that each director who is not a full-time
employee of the Company shall automatically be granted NSOs to purchase 5,000
shares of Common Stock on the day the director is first elected to the Board at
a price equal to the fair market value of the shares as of that date. An
additional option for 5,000 shares is awarded on each anniversary of the
election of a member of the Board.

Options granted pursuant to the New Director Plan vest in three increments
commencing on the date of grant and annually thereafter and the options are
exercisable for a five year period from the date of vesting. All shares granted
under the New Director Plan are subject to adjustments which shall be made for a
merger, recapitalization, stock dividend, stock split or other similar change
affecting the number of outstanding shares of Common Stock of the Company.
Options that remain unexercised at the end of the exercise period terminate. No
options may be granted under the New Director Plan after ten years from the
effective date.

Options granted under the New Director Plan are nontransferable and may be
exercised only by the individual to whom it is issued and only during the period
in which he or she is an outside director of the Company or within 30 days
following his or her resignation or termination of service. Options granted
under the New Director Plan shall not terminate in the event an outside director
becomes a full-time employee of the Company.

The following sets forth the options granted to date under the New Director
Plan to (i) each of the directors up for re-election, (ii) all nominees for
director, and (iii) all directors and nominees as a group.

<TABLE>
<CAPTION>
EXERCISE PRICE NUMBER OF
NAME PER SHARE ($)(1) SHARES
- ------------------------------------------------------------------ ---------------- ---------
<S> <C> <C>
Peter R. Barton................................................... -- --
Robert R. Bennett................................................. -- --
Barry Diller...................................................... -- --
James G. Held..................................................... -- --
Leo J. Hindery, Jr. .............................................. -- --
General H. Norman Schwarzkopf..................................... -- --
Eli J. Segal...................................................... $ 11.125 5,000
All directors and nominees as a group............................. $ 11.125 5,000
</TABLE>

- ---------------
(1) It is not possible to determine the value of these benefits because the
benefits will depend upon exercise decisions by participants and the fair
market value of the Company's Stock at various future dates following the
adoption of the proposed New Employee Option Plan.

The tax consequences of the New Director Plan will be the same as set forth
above with respect to the New Employee Option Plan.

The Board of Directors recommends the approval of the New Director Plan.
Proxies solicited by the Board of Directors will be so voted unless stockholders
specify otherwise in their proxies. Approval requires a favorable vote by the
holders of a majority of the outstanding stock present in person or represented
by proxy and entitled to vote thereon at the meeting.

INDEPENDENT AUDITORS

KPMG Peat Marwick LLP was engaged as auditors to examine the books and
records of the Company for each of the years in the three year period ended
December 31, 1995, 1994 and 1993. Pending the

22
<PAGE> 26

anticipated change of control described in "ANTICIPATED CHANGE IN CONTROL," the
stockholders are not being requested to take any action at this time with
respect to the Company's independent auditors.

Representatives of KPMG Peat Marwick LLP are expected to be present at the
Annual Meeting and will be available to respond to appropriate questions and may
make a statement if they desire to do so.

STOCKHOLDER PROPOSALS

Any proposal which a stockholder intends to present at the annual meeting
of stockholders in 1997 must be received by the Company prior to November 15,
1996, in order to be considered for inclusion in the proxy statement and form of
proxy relating to such meeting.

OTHER MATTERS

The Board of Directors knows of no other matters which are likely to be
brought before the Annual Meeting. If any matters are brought before the
meeting, however, James G. Held, who is President and Chief Executive Officer of
the Company and the proxy agent named in the enclosed form of proxy, will vote
on such matters in accordance with his best judgment.

By Order of the Board of Directors,

LOGO
Barry Augenbraun
Secretary

March 28, 1996
St. Petersburg, Florida

23
<PAGE> 27
APPENDIX A

HOME SHOPPING NETWORK, INC.

1996 STOCK OPTION PLAN FOR EMPLOYEES

ESTABLISHMENT, PURPOSE AND TERM OF PLAN.

ESTABLISHMENT. The Home Shopping Network, Inc. 1996 Stock
Option Plan for Employees (the "PLAN") is hereby established effective as of
May 10, 1996 (the "EFFECTIVE DATE").

PURPOSE. The purpose of the Plan is to promote the success
of the Company and its Subsidiaries by attracting and retaining employees by
supplementing their cash compensation and providing a means for them to
increase their holdings of Stock of the Company. The opportunity so provided
and the receipt of Options as compensation are intended to foster in
participants a strong incentive to put forth maximum effort for the continued
success and growth of the Company for the benefit of customers and
shareholders, to aid in retaining individuals who put forth such efforts, and
to assist in attracting the best available individuals in the future.

TERM OF PLAN. The Plan shall continue in effect until the
earlier of its termination by the Board or the date on which all of the shares
of Stock available for issuance under the Plan have been issued. However, all
Options shall be granted, if at all, within ten (10) years from the Effective
Date. Notwithstanding the foregoing, if the maximum number of shares of Stock
issuable pursuant to the Plan as provided in Section 3.1 has been increased at
any time, all Options shall be granted, if at all, within ten (10) years from
the date such amendment was adopted by the Board. On the effective date of the
Plan, it shall supersede the 1986 Stock Option Plan for Employees, which shall
terminate on that date.

1. DEFINITIONS AND CONSTRUCTION.

1.1 DEFINITIONS. Whenever used herein, the following
terms shall have their respective meanings set forth below:

(a) "BOARD" means the Board of Directors of the
Company or the Committee.
(b) "CODE" means the Internal Revenue Code of
1986, as amended, and any applicable regulations promulgated thereunder.

(c) "COMMITTEE" means the Compensation/Benefits
Committee or other committee of the Board duly appointed to administer the Plan
and having such powers as shall be specified by the Board. Unless the powers
of the Committee have been specifically limited, the Committee shall have all
of the powers of the Board granted herein, including, without limitation, the
power to amend or terminate the Plan at any time, subject to the terms of the
Plan and any applicable limitations imposed by law.

1
<PAGE> 28

(d) "EMPLOYEE" means any person treated as an
employee (including an officer or a director who is also treated as an
employee) in the records of the Company and its Subsidiaries; provided,
however, that neither service as a director nor payment of a director's fee
shall be sufficient to constitute employment for purposes of the Plan.
Notwithstanding the foregoing, the Chairman of the Board and any consultant
approved by the Board shall be deemed an Employee for purposes of the Plan;
provided, however neither the Chairman nor a consultant may be issued
Incentive Stock Options.

(e) "EXCHANGE ACT" means the Securities Exchange
Act of 1934, as amended.

(f) "FAIR MARKET VALUE" means, as of any date,
the closing price of the Stock on the New York Stock Exchange, Inc. (as
published by the Wall Street Journal, if published) on the day prior to such
date, or if the Stock was not traded on such day, on the next preceding day on
which the Stock was traded.

(g) "INCENTIVE STOCK OPTION" means an Option so
denominated in the Option Agreement and which qualifies as an incentive stock
option within the meaning of Section 422(b) of the Code.

(h) "NONQUALIFIED STOCK OPTION" means an Option
so denominated or which does not qualify as an Incentive Stock Option.

(i) "OPTION" means a right to purchase Stock
(subject to adjustment as provided in Section 3.2) pursuant to the terms and
conditions of the Plan. An Option may be either an Incentive Stock Option or a
Nonqualified Stock Option.

(j) "OPTION AGREEMENT" means a written agreement
between the Company and an Optionee setting forth the terms, conditions and
restrictions of the Option and/or SAR granted to the Optionee.

(k) "OPTIONEE" means a person who has been
granted one or more Options and/or SAR's pursuant to the Plan.

(l) "RULE 16B-3" means Rule 16b-3 under the
Exchange Act, as amended from time to time, or any successor rule or
regulation.

(m) "STOCK" means the Company's common stock,
$.01 par value, as adjusted from time to time in accordance with Section
3.2.

2
<PAGE> 29

(n) "STOCK APPRECIATION RIGHT (SAR)" means the
right, granted by the Board (subject to adjustments provided in Section 3.2),
pursuant to the terms of the Plan, to receive payment equal to the subsequent
increase in the Fair Market Value of the Stock.

(o) "SUBSIDIARY" means any present or future
"subsidiary corporation" of the Company, as defined in Section 424(f) of the
Code.

(p) "TEN PERCENT OWNER OPTIONEE" means an
Optionee who, at the time an Option is granted to the Optionee, owns stock
constituting more than ten percent (10%) of the total combined voting power of
all classes of stock of Company within the meaning of Section 422(b)(6) of the
Code.

(q) "TRANSFER OF CONTROL" shall mean a
transaction or a series of related transactions (collectively, the
"TRANSACTION") wherein the shareholders of the Company immediately before the
Transaction do not retain immediately after the Transaction, in substantially
the same proportions as their ownership of shares of the Company's voting stock
immediately before the Transaction, direct or indirect beneficial ownership of
more than fifty percent (50%) of the total combined voting power of the
outstanding voting stock of the Company or the corporation or corporations to
which the assets of the Company were transferred (the "TRANSFEREE
CORPORATION(S)"), as the case may be, except for such a transaction pursuant to
which Barry Diller, Liberty Media Corporation or any of their respective
affiliates, is or becomes such a 50% owner. For purposes of the preceding
sentence, indirect beneficial ownership shall include, without limitation, an
interest resulting from ownership of the voting stock of one or more
corporations which, as a result of the Transaction, own the Company or the
Transferee Corporation(s), as the case may be, either directly or through one
or more subsidiary corporations. The Board shall have the right to determine
whether multiple sales or exchanges of the voting stock of the Company are
related, and its determination shall be final, binding and conclusive.

1.2 CONSTRUCTION. Captions and titles contained herein
are for convenience only and shall not affect the meaning or interpretation of
any provision of the Plan. Except when otherwise indicated by the context, the
singular shall include the plural, the plural shall include the singular, and
the term "or" shall include the conjunctive as well as the disjunctive.

2. ADMINISTRATION.

2.1 ADMINISTRATION BY THE BOARD. The Plan shall be
administered by the Board, including any duly appointed committee of the Board.
All questions of interpretation of the Plan or of any Option or SAR shall be
determined by the Board, and such determinations shall be final and binding
upon all persons having an interest in the Plan or such Option or SAR.

2.2 POWERS OF THE BOARD. In addition to any other powers
set forth in the Plan and subject to the provisions of the Plan and
restrictions regarding Incentive Stock Options set forth in the Code, the Board
shall have the full and final power and authority, in its sole discretion:

3
<PAGE> 30

(a) to determine the persons to whom, and the
time or times at which, Options shall be granted and the number of shares of
Stock to be subject to each Option which determination need not be uniform
among persons similarly situated and may be made selectively among Employees;

(b) to designate Options as Incentive Stock
Options or Nonqualified Stock Options;

(c) to determine the persons to whom, and the
time or times at which, SAR's and the number thereof shall be granted which
determination need not be uniform among persons similarly situated and may be
made selectively among Employees;

(d) to determine the terms, conditions and
restrictions applicable (which need not be identical) to each Option and SAR
including, without limitation, (i) the exercise price of the Option or SAR,
(ii) the method of payment for shares purchased upon the exercise of the
Option, (iii) the method for satisfaction of any tax withholding obligation
arising in connection with the Option or SAR , including by the withholding or
delivery of shares of stock, (iv) the method of payment upon exercise of any
SAR's, (v) the timing, terms and conditions of the exercisability of the
Option or SAR, (vi) the time of the expiration of the Option or SAR, (vii) the
effect of the Optionee's termination of employment or service with Company on
any of the foregoing, and (viii) all other terms, conditions and restrictions
applicable to the Option or SAR or such shares not inconsistent with the terms
of the Plan;

(e) to approve one or more forms of Option
Agreement;

(f) to amend the exercisability of any Option or
SAR , including with respect to the period following an Optionee's termination
of employment or service with the Company;

(g) to prescribe, amend or rescind rules,
guidelines and policies relating to the Plan, or to adopt supplements to, or
alternative versions of, the Plan, including, without limitation, as the Board
deems necessary or desirable to comply with the laws of, or to accommodate the
tax policy or custom of, foreign jurisdictions whose citizens may be granted
Options or SAR's; and

(h) to correct any defect, supply any omission or
reconcile any inconsistency in the Plan or any Option Agreement and to make all
other determinations and take such other actions with respect to the Plan or
any Option or SAR as the Board may deem advisable to the extent consistent with
the Plan and applicable law.

2.3 DISINTERESTED ADMINISTRATION. The Plan shall be
administered in compliance with the "disinterested administration" requirements
of Rule 16b-3.

4
<PAGE> 31

3. SHARES SUBJECT TO PLAN.

3.1 MAXIMUM NUMBER OF SHARES ISSUABLE. Subject to
adjustment as provided in Section 3.2, the maximum aggregate number of shares
of Stock that may be issued under the Plan and under the 1996 Stock Option Plan
for Outside Directors shall be Eighteen Million Seven Hundred Thousand
(18,700,000) and shall consist of authorized but unissued or reacquired shares
of Stock or any combination thereof. If an outstanding Option or SAR for any
reason expires or is terminated or canceled prior to being fully exercised, the
shares of Stock allocable to the unexercised portion of such Option or SAR,
shall again be available for issuance under the Plan.

3.2 ADJUSTMENTS FOR CHANGES IN CAPITAL STRUCTURE. In the
event of any stock dividend, stock split, reverse stock split,
recapitalization, combination, reclassification or similar change in the
capital structure of the Company, appropriate adjustments shall be made in the
number and class of shares subject to the Plan and to any outstanding Options
and SAR's and in the exercise price per share of any outstanding Options and
SAR's. If a majority of the shares which are of the same class as the shares
that are subject to outstanding Options and SAR's are exchanged for, converted
into, or otherwise become (whether or not pursuant to a Transfer of Control )
shares of another corporation (the "NEW SHARES"), the Board shall amend the
outstanding Options and SAR's to provide that such Options and SAR's are
exercisable for or with respect to New Shares. In the event of any such
amendment, the number of shares subject to, and the exercise price per share
of, the outstanding Options and SAR's shall be adjusted in a fair and equitable
manner as determined by the Board, in its sole discretion. In the event of any
merger, consolidation or other combination materially effecting the number of
shares of Stock outstanding, the Board may, in its discretion, amend the
outstanding Options to make appropriate adjustments in the number and class of
shares subject to the Plan and to any outstanding Options and SAR's and in the
exercise price per share of any outstanding Options and SAR's. Notwithstanding
the foregoing, any fractional share resulting from an adjustment pursuant to
this Section 3.2 shall be rounded up or down to the nearest whole number, as
determined by the Board, and in no event may the exercise price be decreased
to an amount less than the par value, if any, of the stock subject to the
Option. The adjustments determined by the Board pursuant to this Section 3.2
shall be final, binding and conclusive.

4. ELIGIBILITY AND OPTION LIMITATIONS.

4.1 PERSONS ELIGIBLE FOR OPTIONS AND SAR'S. Options and
SAR's may be granted only to Employees.

4.2 DIRECTORS SERVING ON COMMITTEE. No member of a
committee established to administer the Plan in compliance with the
"disinterested administration" requirements of Rule 16b-3, while a member,
shall be eligible to be granted an Option or SAR.

4.3 FAIR MARKET VALUE LIMITATION. To the extent that the
aggregate Fair Market Value of stock with respect to which options designated
as Incentive Stock Options are exercisable by an Optionee for the first time
during any calendar year (under all stock option plans of the

5
<PAGE> 32

Company, including the Plan) exceeds One Hundred Thousand Dollars ($100,000),
the portion of such Options which exceeds such amount shall be treated as
Nonqualified Stock Options. For purposes of this Section 4.3, options
designated as Incentive Stock Options shall be taken into account in the order
in which they were granted, and the Fair Market Value of stock shall be
determined as of the time the Option with respect to such stock is granted. If
the Code is amended to provide for a different limitation from that set forth
in this Section 4.3, such different limitation shall be deemed incorporated
herein effective as of the date and with respect to such Options as required or
permitted by such amendment to the Code. If an Option is treated as an
Incentive Stock Option in part and as a Nonqualified Stock Option in part by
reason of the limitation set forth in this Section 4.3, the Optionee may
designate which portion of such Option the Optionee is exercising and may
request that separate certificates representing each such portion be issued
upon the exercise of the Option. In the absence of such designation, the
Optionee shall be deemed to have exercised the Incentive Stock Option portion
of the Option first.

4.4 NO RIGHT OF EMPLOYMENT. Nothing in the Plan or in
any Option or SAR granted shall confer any right on an Employee to continue in
the employ of the Company or its Subsidiaries or shall interfere in any way
with the right of the Company or its Subsidiaries to terminate such Employee's
employment at any time.

5. TERMS AND CONDITIONS OF GRANTS. Options and SAR's shall be
evidenced by Option Agreements specifying the number of shares of Stock covered
thereby, in such form as the Board shall from time to time establish. SAR's
may be granted alone or in tandem with an Option grant, in the Board's sole
discretion(but at all times subject to the provisions of the Code). Option
Agreements may incorporate all or any of the terms of the Plan by reference and
shall comply with and be subject to the following terms and conditions:

5.1 EXERCISE PRICE. The exercise price for each Option
and SAR shall be established in the sole discretion of the Board; provided,
however, if the Option is an Incentive Stock Option that (a) the exercise price
per share for an Option shall not be less than the Fair Market Value of a
share of Stock on the effective date of grant of the Option; and (b) no Option
granted to a Ten Percent Owner Optionee shall have an exercise price per share
less than one hundred ten percent (110%) of the Fair Market Value of a share of
Stock on the effective date of grant of the Option. The exercise price for a
Nonqualified Stock Option and SAR shall be the same as provided above, unless
otherwise determined by the Board (but at all times subject to the provisions
of the Code). Notwithstanding the foregoing, an Option (whether an Incentive
Stock Option or a Nonqualified Stock Option) may be granted with an exercise
price lower than the minimum exercise price set forth above if such Option is
granted pursuant to an assumption or substitution for another option in a
manner qualifying under the provisions of Section 424(a) of the Code.

5.2 EXERCISE PERIOD. Options and SAR's shall be
exercisable at such time or times, or upon such event or events, and subject to
such terms, conditions, performance criteria, and restrictions as shall be
determined by the Board and set forth in the Option Agreement evidencing such
Option; provided, however, that (a) no Option or SAR shall be exercisable after
the expiration

6
<PAGE> 33

of ten (10) years after the effective date of grant of such Option or SAR; and
(b) no Incentive Stock Option granted to a Ten Percent Owner Optionee shall be
exercisable after the expiration of five (5) years after the effective date of
grant of such Option.

5.3 PAYMENT OF OPTION EXERCISE PRICE.

(a) FORMS OF CONSIDERATION AUTHORIZED. Except as
otherwise provided below, payment of the exercise price for the number of
shares of Stock being purchased pursuant to any Option shall be made (i) in
cash, by check, or cash equivalent, (ii) by tender to the Company of shares of
Stock owned by the Optionee having a Fair Market Value (as determined by the
Company without regard to any restrictions on transferability applicable to
such stock by reason of federal or state securities laws or agreements with an
underwriter for the Company) not less than the exercise price, (iii) by the
assignment of the proceeds of a sale or loan with respect to some or all of the
shares being acquired upon the exercise of the Option (including, without
limitation, through an exercise complying with the provisions of Regulation T
as promulgated from time to time by the Board of Governors of the Federal
Reserve System) (a "CASHLESS EXERCISE"), (iv) by such other consideration as
may be approved by the Board from time to time to the extent permitted by
applicable law or (v) by any combination thereof. The Board may at any time or
from time to time, by adoption of or by amendment to the standard forms of
Option Agreement described in Section 6, or by other means, grant Options which
do not permit all of the foregoing forms of consideration to be used in payment
of the exercise price or which otherwise restrict one or more forms of
consideration.

(b) TENDER OF STOCK. Notwithstanding the
foregoing, an Option may not be exercised by tender to the Company of shares of
Stock to the extent such tender of Stock would constitute a violation of the
provisions of any law, regulation or agreement restricting the redemption of
the Company's stock. Unless otherwise provided by the Board, an Option may not
be exercised by tender to the Company of shares of Stock unless such shares
either have been owned by the Optionee for more than six (6) months or were not
acquired, directly or indirectly, from the Company.

(c) CASHLESS EXERCISE. The Company reserves, at
any and all times, the right, in the Company's sole and absolute discretion, to
establish, decline to approve or terminate any program or procedures for the
exercise of Options by means of a Cashless Exercise.

5.4 PAYMENT OF SAR'S. Upon exercise of a SAR the
Company shall pay, subject to 5.5 below, the amount, if any, by which the
Fair Market Value of a share of Stock on the date of exercise exceeds the Fair
Market Value on the date of grant. The exercise of a SAR shall cancel any
Option associated with it if said SAR was granted in tandem with an Option.
The payment for SAR's shall be made in shares of Stock, valued at the Fair
Market Value on the date of exercise or, at the sole discretion of the Board,
in cash, or partly in cash and partly in Stock.

7
<PAGE> 34

5.5 TAX WITHHOLDING. The Company shall have the right,
but not the obligation, to deduct from the shares of Stock issuable upon the
exercise of an Option, or to deduct from amounts due the Optionee upon exercise
of a SAR or to accept from the Optionee the tender of, a number of whole shares
of Stock having a Fair Market Value, as determined by the Company, equal to all
or any part of the federal, state, local and foreign taxes, if any, required by
law to be withheld by the Company with respect to such Option or SAR exercise.
Alternatively, or in addition, in its sole discretion, the Company shall have
the right to require the Optionee, through payroll withholding, cash payment or
otherwise, including by means of a Cashless Exercise, to make adequate
provision for any such tax withholding obligations of the Company arising in
connection with the Option or SAR exercise. The Company shall have no
obligation to deliver shares of Stock, money or to release shares of Stock from
an escrow established pursuant to the Option Agreement until the Company's tax
withholding obligations have been satisfied by the Optionee.

6. STANDARD FORMS OF OPTION AGREEMENT.

6.1 INCENTIVE STOCK OPTIONS. Unless otherwise provided
by the Board at the time the Option is granted, an Option designated as an
"Incentive Stock Option" shall comply with and be subject to the terms and
conditions set forth in the appropriate form of Incentive Stock Option
Agreement as adopted by the Board and as amended from time to time.

6.2 NONQUALIFIED STOCK OPTIONS. Unless otherwise
provided by the Board at the time the Option is granted, an Option designated
as a "Nonqualified Stock Option" shall comply with and be subject to the terms
and conditions set forth in the appropriate form of Nonqualified Stock Option
Agreement as adopted by the Board and as amended from time to time.

6.3 SAR'S. Unless otherwise provided by the Board at
the time a SAR is granted, a SAR awarded either alone or in tandem with an
Option shall comply with and be subject to the terms and conditions set forth
in the appropriate form of SAR Option Agreement as adopted by the Board and as
amended from time to time.

6.4 STANDARD TERM OF OPTIONS. Except as otherwise
provided by the Board in the grant of an Option or SAR, any Option or SAR
granted hereunder shall have a term of ten (10) years from the effective date
of grant of the Option or SAR.

6.5 STANDARD VESTING PROVISIONS. Except as otherwise
provided by the Board in the grant of an Option or SAR, any Options or SAR's
granted hereunder shall become vested and exercisable at the rate of twenty
percent (20%) per year, commencing upon the first anniversary of the effective
date of grant of the Option or SAR and each of the four (4) subsequent
anniversaries thereafter.

6.6 AUTHORITY TO VARY TERMS. The Board shall have the
authority from time to time to vary the terms of any of the standard forms of
Option Agreement described in this Section

8
<PAGE> 35

6 either in connection with the grant or amendment of an individual Option or
SAR or in connection with the authorization of a new standard form or forms;
provided, however, that the terms and conditions of any such new, revised or
amended standard form or forms of Option Agreement shall be in accordance with
the terms of the Plan. The Board, may in its discretion, provide for the
extension of the exercise period of an Option or SAR, accelerate the vesting of
an Option or SAR, eliminate or make less restrictive any restrictions contained
in an Option Agreement or waive any restriction or provision of this Plan or
an Option Agreement in any manner that is either (i) not adverse to the
Optionee or (ii) consented to by the Optionee.

7. NONTRANSFERABILITY OF OPTIONS. During the lifetime of the
Optionee, an Option or SAR shall be exercisable only by the Optionee or the
Optionee's guardian or legal representative. No Option or SAR shall be
assignable or transferable by the Optionee, except by will or by the laws of
descent and distribution. Following an Optionee's death, the Option shall be
exercisable to the extent provided in Section 8 below.

8. EFFECT OF TERMINATION OF SERVICE.

8.1 OPTION AND SAR EXERCISABILITY.

(a) DISABILITY. If the Optionee's service with
the Company is terminated because of the disability of the Optionee, the
Option, to the extent unexercised and exercisable on the date on which the
Optionee's service terminated, may be exercised by the Optionee (or the
Optionee's guardian or legal representative) at any time prior to the
expiration of three (3) months after the date on which the Optionee's service
terminated, but in any event no later than the Option expiration date.

(b) DEATH. If the Optionee's service with the
Company is terminated because of the death of the Optionee, the Option, to the
extent unexercised and exercisable on the date on which the Optionee's service
terminated, may be exercised by the the Optionee's legal representative or
other person who acquired the right to exercise the Option by reason of the
Optionee's death at any time prior to the expiration of six (6) months after
the date on which the Optionee's service terminated, but in any event no later
than the Option Expiration Date. The Optionee's service shall be deemed to
have terminated on account of death if the Optionee dies within three (3)
months after the Optionee's termination of service.

(c) TERMINATION OF SERVICE. If the Optionee's
service with the Company terminates for any reason, except disability or
death, the Option, to the extent unexercised and exercisable by the Optionee on
the date on which the Optionee's service terminated, may be exercised by the
Optionee within six (6) months after the date on which the Optionee's service
terminated, but in any event no later than the Option Expiration Date.
Notwithstanding the foregoing, the Company , may in its sole discretion,
cancel the Options if the Optionee has been Terminated for Cause (as defined
in Section 8.2).

9
<PAGE> 36

(e) SAME CONDITIONS APPLICABLE TO SAR'S. The
same terms and conditions applicable to Options shall apply to the
exercisability of SAR's upon the occurrence of (a) - (d) above.

8.2 TERMINATION FOR CAUSE. "TERMINATION FOR CAUSE" shall
mean termination by the Company of the Optionee's service with Company for
any of the following reasons: (i) theft, dishonesty, or falsification of any
employment or Company records; (ii) improper use or disclosure of Company's
confidential or proprietary information; (iii) the Optionee's failure or
inability to perform any reasonable assigned duties after written notice from
Company of, and a reasonable opportunity to cure, such failure or inability;
(iv) any material breach by the Optionee of any employment agreement between
the Optionee and Company, which breach is not cured pursuant to the terms of
such agreement; or (v) the Optionee's conviction of any criminal act which
impairs Optionee's ability to perform his or her duties with Company.
Termination for Cause pursuant to the foregoing shall be determined in the sole
but reasonably exercised discretion of the Company.

9. EFFECT OF TRANSFER OF CONTROL. Except as otherwise provided
by the Board in the grant of an Option or SAR, in the event of a Transfer of
Control, any Options and SAR's outstanding as of the date such Transfer of
Control is determined to have occurred, and which are not then exercisable and
vested, shall become fully exercisable and vested to the full extent of the
original grant; provided, however, in the case of any holder of SAR's who is
subject to Section 16(b) of the Exchange Act, and whose SAR's are not already
outstanding for at least six months at the date of the Transfer of Control,
such SAR's shall not become fully exercisable and vested until they have been
outstanding for six months.

10. INDEMNIFICATION. In addition to such other rights of
indemnification as they may have as members of the Board or officers or
employees of the Company , members of the Board and any officers or employees
of the Company to whom authority to act for the Board is delegated shall be
indemnified by the Company against all reasonable expenses, including
attorneys' fees, incurred in connection with the defense of any action, suit
or proceeding, or in connection with any appeal therein, to which they or any
of them may be a party by reason of any action taken or failure to act under or
in connection with the Plan, Option, or any right granted hereunder, and
against all amounts in settlement thereof (provided such settlement is approved
by independent legal counsel selected by the Company) or paid in satisfaction
of a judgment in any such action, suit or proceeding, except in relation to
matters as to which it shall be adjudged in such action, suit or proceeding
that such person is liable for gross negligence, bad faith or intentional
misconduct in duties; provided, however, that within sixty (60) days after the
institution of such action, suit or proceeding, such person shall offer to the
Company, in writing, the opportunity at its own expense to handle and defend
the same. Without limiting the generality of the foregoing, Company will pay
the expenses (including reasonable counsel fees) of defending any such claim,
action, suit or proceeding in advance of its final disposition, upon receipt of
such person's written agreement to repay all amounts advanced if it should
ultimately be determined that such person is not entitled to be indemnified
under this Section.

10
<PAGE> 37

11. TERMINATION OR AMENDMENT OF PLAN. The Board, without further
approval of the shareholders, may terminate or amend this Plan at any time in
any respect as the Board deems advisable, subject to any required stockholder
or regulatory approval and to any conditions established by the terms of such
amendment, provided that in no event shall the Plan be amended more than once
every six (6) months other than to comply with changes in any applicable law or
governmental regulation in the Code, the Employee Retirement Income Security
Act, or the rules promulgated by the Securities and Exchange Commission. In
any event, no termination or amendment of the Plan may adversely affect any
then outstanding Option or SAR or any unexercised portion thereof, without the
consent of the Optionee, unless such termination or amendment is required to
enable an Option designated as an Incentive Stock Option to qualify as an
Incentive Stock Option or is necessary to comply with any applicable law or
government regulation.

12. DISSOLUTION OF COMPANY. Upon the dissolution of the Company,
the Plan shall terminate and any and all Options previously granted shall lapse
on the date of such dissolution.

13. RIGHTS AS SHAREHOLDERS. No Optionee, nor any beneficiary
or other person claiming through an Optionee, shall have any interest in any
shares of Stock allocated for the purposes of the Plan or subject to any Option
or SAR until such shares of Stock shall have been issued to the Optionee or
such beneficiary or other person. Furthermore, the existence of the Options
or the SAR's shall not affect the right or power of the Company or its
shareholders to make adjustments, recapitalization, reorganizations, or other
changes in the Company's capital structure or its business; issue bonds,
debentures, preferred or prior preference stocks affecting the Stock of the
Company or the rights thereof; dissolve the Corporation or sell or transfer any
part of its assets or business; or do any other corporate act, whether of a
similar character or otherwise.

14. GOVERNING LAW. The validity, interpretation, and
administration of the Plan and of any rules, regulations, determinations, or
decisions made thereunder, and the rights of any and all persons having or
claiming to have any interest therein or thereunder, shall be determined
exclusively in accordance with the laws of the State of Florida, without giving
effect to choice of law provisions. Without limiting the generality of the
foregoing, the period within which any action in connection with the Plan must
be commenced shall be governed by the laws of the State of Florida, without
regard to the place where the act or omission complained of took place or the
residence of any party to such action.

15. ARBITRATION. Any action brought in connection with the Plan
or an Option Agreement shall be settled exclusively by binding arbitration
conducted in the City of Tampa, Florida in accordance with the commercial rules
of the American Arbitration Association then in effect (the "Rules"), by a
single, independent arbitrator selected by the Company and the other party to
the action. If the parties cannot agree on an arbitrator, within thirty (30)
days of the commencement of an arbitration proceeding hereunder, either party
may request that the American Arbitration Association select an arbitrator,
with experience in law relating to option plans, in accordance with the Rules.
The decision of the arbitrator shall be final and binding. Judgment upon the
award rendered by the arbitrator may be entered in any court having
jurisdiction thereof. The

11
<PAGE> 38

cost of any arbitration proceeding conducted hereunder shall be borne equally
between the parties unless otherwise determined by the arbitrator.

16. SHAREHOLDER APPROVAL. The Plan or any increase in the maximum
number of shares of Stock issuable thereunder as provided in Section 3.1 (the
"MAXIMUM SHARES") shall be approved by the shareholders of the Company within
twelve (12) months of the date of adoption thereof by the Board. Options
granted prior to shareholder approval of the Plan or in excess of the Maximum
Shares previously approved by the shareholders shall become exercisable no
earlier than the date of shareholder approval of the Plan or such increase in
the Maximum Shares, as the case may be.

IN WITNESS WHEREOF, the undersigned Secretary of the Company certifies
that the foregoing Home Shopping Network, Inc. 1996 Stock Option Plan for
Employees was duly adopted by the Board on February 12, 1996.

----------------------------
Secretary

12
<PAGE> 39
APPENDIX B

HOME SHOPPING NETWORK, INC.
1996 STOCK OPTION PLAN FOR OUTSIDE DIRECTORS

I. Purpose

It is the belief of the management of Home Shopping Network, Inc. (the
"Company") that the Board of Directors will effect decisions and render
guidance to the Company which materially enhance the economic growth of the
Company and provide material benefit to the Company. Accordingly, management
believes that Directors should be afforded the opportunity to participate in
the Company's growth by acquiring the Company's Common Stock on a regular
basis. By providing this opportunity through the adoption of this Stock Option
Plan for Outside Directors (the "Plan"), it is the intention of the Company to
give appropriate recognition to these individuals who will have continuing
responsibility for the Company's growth and profitability.

II. Eligibility

The only persons eligible to receive options (the "Options") for the
Company's common stock, $.01 par value ("Stock") under the Plan shall be the
Company's existing and future Directors who are not also employees of the
Company.

III. Shares Subject to the Plan

The maximum number of shares of Stock which may be issued upon
exercise of Options granted under the Plan and under the Company's 1996 Stock
Option Plan for Employees shall not exceed 18,700,000 shares. If any Option
expires or terminates prior to being fully exercised, any shares of Stock
allocable to the unexercised portion of such Option may again be issued subject
to the terms of the Plan.

Appropriate adjustments shall be made in the number of shares of Stock
available under the Plan and in the Option price per share to give effect to
adjustments necessary as a result of a merger, consolidation, recapitalization,
reclassification, combination, stock dividend, stock split or other relevant
change in the capital structure of the Company. Such adjustments shall be
determined by the Board of Directors in their good faith determination; to the
maximum extent possible, such adjustments shall be consistent with adjustments
made to options granted under the Company's 1996 Stock Option Plan for
Employees.

IV. Terms and Conditions

(a) Grant of Options

Subject to the provisions of the Plan, Directors of the
Company shall be granted Nonqualified Stock Options for the
purchase of shares of Stock as set forth in the Plan.
<PAGE> 40

(b) Option Agreement

Each Option shall be evidenced by a written agreement between
the Company and the Director specifying the number of shares
of Stock that may be exercised by its purchase, and containing
such other terms and provisions as may be approved by the
Board of Directors.

The date on which an Option is granted shall be: (1) the first
day upon which a Director who is not also an employee is first
elected to the Board of Directors, or (2) the date on which an
Option is issued in substitution for an option previously
granted under the Plan or an Option previously granted that is
subsequently amended, or (3) the anniversary of the date on
which a Director was elected to the Board of Directors.

(d) Option Price

Each Option Agreement shall state the purchase price of each
share of Stock which may be acquired upon exercising the
Option, which price shall be the fair market value of each
share as of the Date of Grant. Fair Market Value shall be
deemed to be the closing price of the shares on the New York
Stock Exchange, Inc. (or any other national securities
exchange on which the shares are traded) on the trading day
preceding the Date of Grant.

(e) Number of Shares Granted

(1) Each Director shall receive a Nonqualified Stock
Option to purchase 5,000 shares of Stock
automatically on the date specified in paragraph (c)
of this Article IV, exercisable in accordance with
the provisions of paragraph (f) (1) of this Article
IV.

(2) Each Director shall receive a Nonqualified Stock
Option to purchase an additional 5,000 shares of
Stock automatically on the date that such Director
commences his second year of service as a director,
and an additional 5,000 shares on the date that he
commences each year of service as a director
thereafter.

(f) Option Period and Restrictions of Exercise

(1) The Options granted pursuant to paragraph (e) shall
be exercisable in the following manner for the
periods specified: Options for 1,668 shares of the
Stock shall first become exercisable on the date the
Options are granted and

2
<PAGE> 41

must be fully exercised within five years from
that date. Options for an additional 1,666 shares of
the Stock shall become exercisable on the first and
second anniversary of the date the Options were
granted; such Options must be exercised within five
years from the date they first become exercisable.

Any Options which are not exercised within the
five year periods specified above shall expire.

(g) Manner of Exercise

Subject to the conditions and restrictions contained in
paragraph IV (h) below, the Option shall be exercised by
delivering written notice of exercise to the Secretary or
Treasurer of the Company. Such notice is irrevocable and must
be accompanied by payment in cash and a signed Option exercise
form.

(h) Payment of Option Exercise Price

(1) Forms of Consideration Authorized. Except as
otherwise provided below, payment of the exercise
price for the number of shares of Stock being
purchased pursuant to any Option shall be made (i) in
cash, by check, or cash equivalent, (ii) by tender to
the Company of shares of Stock owned by the Optionee
having a Fair Market Value (as determined by the
Company without regard to any restrictions on
transferability applicable to such stock by reason of
federal or state securities laws or agreements with
an underwriter for the Company) not less than the
exercise price, (iii) by the assignment of the
proceeds of a sale or loan with respect to some or
all of the shares being acquired upon the exercise of
the Option (including, without limitation, through an
exercise complying with the provisions of Regulation
T as promulgated from time to time by the Board of
Governors of the Federal Reserve System) (a "Cashless
Exercise"), or (iv) by any combination thereof.

(2) Tender of Stock. Notwithstanding the foregoing, an
Option may not be exercised by tender to the Company
of shares of Stock to the extent such tender of Stock
would constitute a violation of the provisions of any
law, regulation or agreement restricting the
redemption of the Company's stock. An Option may not
be exercised by tender to the Company of shares of
Stock unless such shares either have been owned by
the Optionee for more than six (6) months.

3
<PAGE> 42
(3) Cashless Exercise. The Company reserves, at any and
all times, the right, in the Company's sole and
absolute discretion, to establish, decline to
approve or terminate any program or procedures for
the exercise of Options by means of a Cashless
Exercise.

(i) Tax Withholding

The Company shall have the right, but not the obligation, to
deduct from the shares of Stock issuable upon the exercise of
an Option, or to accept from the Optionee the tender of, a
number of whole shares of Stock having a Fair Market Value, as
determined by the Company, equal to all or any part of the
federal, state, local and foreign taxes, if any, required by
law to be withheld by the Company with respect to such Option
exercise. Alternatively, or in addition, in its sole
discretion, the Company shall have the right to require the
Optionee, through cash payment or otherwise, including by
means of a Cashless Exercise, to make adequate provision for
any such tax withholding obligations of the Company arising in
connection with the Option exercise. The Company shall have
no obligation to deliver shares of Stock, money or to release
shares of Stock from an escrow established pursuant to the
Option Agreement until the Company's tax withholding
obligations have been satisfied by the Optionee.

(j) Transferability and Termination of Option

Each Option granted hereunder may be exercised only by the
individual to whom it is issued and only during the period in
which he or she is serving as an outside Director of the
Company or within the thirty (30) day period following his or
her resignation or other termination of such service for any
reason other than death. If such holder dies before fully
exercising any portion of an option then exercisable, such
Option may be exercised by such holder's legal
representative(s), heir(s) or devisee(s) at any time within
the six (6) month period following his or her death.

(k) Director Becoming Employee

In the event that an outside Director becomes a full-time
employee of the Company, the outside Director shall not
forfeit the Options granted pursuant to this Plan. However,
the outside Director shall have to satisfy all other terms and
provisions of this Plan with respect to the Options granted
hereunder.

(l) Modification or Substitution of Options

Subject to the terms and conditions and within the limitations
of the Plan, the members of the Board of Directors who are not
eligible to participate in the Plan may

4
<PAGE> 43

modify outstanding Options granted under the Plan or
accept the surrender and cancellation of outstanding
Options and authorize the granting of new Options in
substitution therefor. The foregoing notwithstanding, no
modification, cancellation or substitution of an Option
pursuant to this section shall alter or impair any rights or
obligations under any Option theretofore granted under the Plan
and no modification, cancellation or substitution may serve to
increase the aggregate number of securities which may be issued
under the Plan.

V. Effective Date and Term of Plan; Shareholder Approval

Subject to the approval of the Plan by an affirmative vote of the
holders of a majority of the Company's outstanding stock entitled to vote
thereon at the Annual Meeting of Shareholders to be conducted on May 9, 1996,
the effective date of the Plan shall be May 10, 1996, and it shall remain in
existence for a period of ten years thereafter. In the event of shareholder
rejection of the Plan, any Option granted hereunder shall be void and of no
legal effect. No Option may be granted subsequent to the expiration date of
the Plan, but Options then outstanding shall be exercisable in accordance with
the terms hereof.

Any increase in the maximum number of shares of Stock issuable
hereunder as provided in Article III (the "Maximum Shares") shall be approved
by the shareholders of the Company within twelve (12) months of the date of
adoption thereof by the Board. Options granted prior to shareholder approval
of the Plan, or in excess of the Maximum Shares previously approved by the
shareholders, shall become exercisable no earlier than the date of shareholder
approval of the Plan or such increase in the Maximum Shares, as the case may
be.

On the Effective Date of the Plan, it shall supersede the 1986 Stock
Option Plan for Outside Directors, which shall terminate on that date.

VI. Amendment

The Board of Directors may at any time suspend or discontinue the
Plan, but no amendment shall be authorized without shareholder approval which
(i) materially increases the benefits accruing to participants under the Plan;
(ii) materially increases the number of securities which may be issued under
the Plan, except as otherwise provided in Article III; or (iii) materially
modifies the requirements as to eligibility for participation in the Plan.

VII. Rights as Shareholders

No Optionee, nor any beneficiary or other person claiming through an
Optionee, shall have any interest in any shares of Stock allocated for the
purposes of the Plan or subject to any Option until such shares of Stock
shall have been issued to the Optionee or such beneficiary or other person.
Furthermore, the existence of the Options shall not affect the right or power
of the Company or its shareholders to make adjustments, recapitalization,
reorganizations, or other changes in the

5
<PAGE> 44

Company's capital structure or its business; issue bonds, debentures, preferred
or prior preference stocks affecting the Stock of the Company or the rights
thereof; dissolve the Corporation or sell or transfer any part of its assets or
business; or do any other corporate act, whether of a similar character or
otherwise.

VIII. Choice of Law

The validity, interpretation, and administration of the Plan and of
any rules, regulations, determinations, or decisions made thereunder, and the
rights of any and all persons having or claiming to have any interest therein
or thereunder, shall be determined exclusively in accordance with the laws of
the State of Florida, without giving effect to choice of law principles
thereof. Without limiting the generality of the foregoing, the period within
which any action in connection with the Plan must be commenced shall be
governed by the Laws of the State of Florida without regard to the place where
the act or omission complained of took place or the residence of any party to
such action. Any action in connection with the Plan must be brought in the
State of Florida, in the County of Pinellas or Hillsborough.

IN WITNESS WHEREOF, the undersigned Secretary of the Company certifies
that the foregoing Home Shopping Network, Inc. 1996 Stock Option Plan for
Outside Directors was duly adopted by the Board on February 12, 1996.

----------------------------
Secretary

6
<PAGE> 45

APPENDIX C
HOME SHOPPING NETWORK, INC.

REVOCABLE PROXY FOR
MAY 9, 1996 MEETING OF STOCKHOLDERS
COMMON STOCK

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF HOME SHOPPING
NETWORK, INC.

The undersigned hereby appoints James G. Held, President and Chief Executive
Officer of Home Shopping Network, Inc. (the "Company"), as proxy with full power
of substitution, to vote all shares of Common Stock the undersigned is entitled
to vote at the Annual Meeting of Stockholders of the Company to be held at the
Holiday Inn St. Petersburg/Clearwater International Airport Hotel, 3535 Ulmerton
Road, Clearwater, Florida, 10:00 a.m., Eastern Daylight Time on May 9, 1996, or
at any adjournment thereof, as follows, and to act upon such matters as may
properly come before the meeting, as determined in the best judgment of the
President and Chief Executive Officer of the Company, hereby revoking any proxy
previously given:

1. Election of directors.

<TABLE>
<S> <C> <C> <C>
/ / FOR all the nominees listed below / / WITHHOLD AUTHORITY to vote for all nominees listed
(except as marked to the contrary below) below
</TABLE>

(INSTRUCTION: TO WITHHOLD authority to vote for any individual nominee, strike
a line through the nominee named in the list below.)

<TABLE>
<S> <C> <C>
Peter R. Barton James G. Held General H. Norman Schwarzkopf*
Robert R. Bennett Leo J. Hindery, Jr.* Eli J. Segal*
Barry Diller
</TABLE>

* To be voted upon by the holders of Common Stock voting as a separate class.

2. To approve the adoption of the 1996 Stock Option Plan for Employees.
/ / FOR proposal 2 / / AGAINST proposal 2 / / ABSTAIN proposal 2

(Continued on other side)

3. To approve the adoption of the 1996 Stock Option Plan for Outside Directors.
/ / FOR proposal 3 / / AGAINST proposal 3 / / ABSTAIN proposal 3

and to act upon any other matters that may properly come before the meeting, as
determined in his best judgment, all as set out in the Notice and Proxy
Statement relating to the meeting, receipt of which is hereby acknowledged.

All as set out in the Notice and Proxy Statement relating to the meeting,
receipt of which is hereby acknowledged.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSALS 1, 2 AND 3

Shares represented by this proxy will be voted as directed by the
stockholder. If no direction is supplied, the proxy will be voted "FOR"
proposals 1, 2 and 3.

Dated

--------------------------------
(Please sign exactly as name
appears hereon)

--------------------------------
(If stock is owned by more than
one person, all owners should
sign. Persons signing as
executors, administrators,
trustees or in similar
capacities should so indicate.)